Bloemfontein home prices sky high

Like much of the rest of the country residential properties are staying on the market longer, and "asking" prices are coming down in Bloemfontein as buyers are finding it more and more difficult to qualify for or justify seller's asking prices for their homes of all types.

Partially this is a result of a more stable inflation situation, with historically low consumer inflation - except for property asking prices- and an outlook that indicates that this low inflation rate will continue into the foreseeable future. Partially it is simply that buyers are "fully bought" on investment properties and partially simply because buyers do not qualify for finance at these fancy prices.

Unlike other areas, such as Johannesburg where street after street of new development is taking place, development in Bloemfontein has come to a virtual standstill because of the lack of any developable ground being available to developers. The last few stands at Bloem Park, an extension of Langenhoven Park, are being developed after which almost no new development can take place. Those that have been approved are at the very upper end of the market where there is limited demand, with infrastructure and ground costs keeping prices very high. The local municipality are having serious pressure put on them by developers and property professionals through the Manguang Investors Forum (MIF) but with few practical results after two years of negotiations.

More than R2.5 billion of development has been delayed indefinitely or cancelled as a result of the inability of the local authorities to provide services for new development areas including those to the polically correct eastern side of the city. Sold out developments have been cancelled as a result of developers inability to have their ground rezoned.

Local authorities are blaming lack of funds to provide services, but their insistence on a very limited potential development area and non-servicing of guide planned areas has resulted in a virtual halt to development in the City.

Much of this proposed development has been to the North Western side of the city adjacent to Langenhoven Park in the Spitskop/Bainsvlei small holding area. This area which was guide planned some years ago, still has not been developed due to the lack of services being installed by the municipality and more importantly the lack of funds to solve a serious traffic flow problem on the old Kimberley Rd. The amount involved is in the region of R55 million, but despite suggestions from major developers that they are prepared to fund this upgrading, subject to certain conditions, nothing has happened.

The result of this lack of development at a time when there is a continued migration to the city, plus a strong growth in the Black middle class buyer market, has left a severe shortage of developable sites and properties for sale, resulting in a above affordability price demand by sellers.

There appears to be little light on the horizon. Large property developers who need to continue to develop to keep in business are seriously looking to take their business to more accommodating parts of the country and some have already done so. Once lost to the local economy they are unlikely to return.

This serious condition has risen over a number of years and continues to worsen year by year. No housing sites have been developed by the local authorities for more than 20 years and not a single housing erf is available from the Municipality in the cities main areas. For the reasons stated above very little private development has taken place during the same period resulting in a serious housing shortage in the city.

Provision of services by the local authorities would result in a surge of building in the city much of which would naturally tend to be in the middle and affordable price range. The volume of homes that would be built if suitable ground were to be made available is estimated to be in the region of 3 to 4000. This would create large numbers of temporary jobs in the building industry and full time employment for a wide variety of professions and trades.

Mike Spencer of Platinum Global says "We have constant enquiries for a wide variety of development sites including single home, sectional title and commercial enquiries and find it very difficult if impossible to help people. This is having a serious effect on the growth of the city and unless it is rectified urgently by the local authorities is likely to result not only in us lagging behind other major centres in creating new wealth, but in people making a conscious choice to move to more active parts of the country."