Hermanus land scarce, demand rising

Hermanus is a Western Cape seaside resort famous for tourist attractions such as whale watching. Although popular as an upmarket residential area, Hermanus is not immune to the nationwide rise in demand for affordable housing. Locals, including a building contractor and a municipal town planner contribute their comments on the Hermanus property market and the land shortage situation leaving many in need.

Pat McLoughlin, principal of Chas Everitt Hermanus notes that a slow down in sales has not been experienced and states that it may be too early to say whether current interest rates are having a cooling effect on property prices and sales. However, he observes, "there are quite a lot of instances where people are looking but not buying". McLoughlin cites higher interest rates as the potential cause for this kind of activity. "I guess with the rising interest rate people are being more careful with their money."

Of the buyer profile in the area, McLoughlin names surrounding area residents, Gauteng residents and foreigners as showing the most interest. Contrary to popular belief however, he says Hermanus gets more buyers from near-by areas such as Gansbaai than from overseas. Most of these buyers are buying to either live in the area or for investment purposes.

Although most properties in Hermanus can cost anything between R1,4m and R13m (possibly even more), there is still a definite demand for more affordable housing, a need that resonates throughout South Africa as a whole. "As you go down the scale of property, the lower the price the more demand there is I suppose," McLoughlin says of this need.

Property in Hermanus is expensive with land being more valuable and in short supply. This situation has left those looking for homes in the affordable market in a tough position as for some travelling to and from Hermanus for work purposes is impractical and expensive.

Property24's deeds office data shows that the sale of affordable housing in Hermanus was at its peak in 2004 with 96 units sold, the following year saw a sharp drop to 29 transfers. There has been little improvement with 2006 producing only 39 transfers in the affordable housing sector.*

Developments being built in the area vary from lavish golf-estates to lone standing flats and town houses aimed at the middle-class market. However, upmarket properties appear to be the current main focus.

Lourens Theron, principal of Theron Broers Bouers in Hermanus, explains that the "the problem with Hermanus is that we don't have land, Hermanus is caught between a mountain range and the sea and the piece of land that lies in between is earmarked for upmarket development." This land is expensive owing to its proximity to the sea and Theron adds that "people are paying excessive amounts for land and now for someone to do low cost housing on this sought after land does not make sense, they would rather divide it and develop bigger properties or sell it."

This leaves out not only low income earners but middle income earners too. Individuals who earn between R7000 and R10000 monthly, qualify for homes worth approximately R184k to R264k. This is the bracket in which affordable or gap housing can be said to fit.

Property industry figures, such as builders in the area, say although there is a demand for housing in this sector, it is the Municipalities' duty to release land for residential development. "If the municipality can release land, then we'd be glad to develop affordable housing, so you are speaking to the wrong person" says one Hermanus building contractor who opted not to be named. However, much of the land that is set aside by the Overstrand Municipality for housing in Hermanus is in the upmarket sector due to the high value of land.

Riaan Kuchar, manager of town planning and property administration in Overstrand states his awareness of the need for land in the area and says his department is currently in the process of looking at various pieces of land and determining the type of development suitable for each before it can be made available.

His response to the call for release of land for affordable residential development is: "My council and I are trying to see how we can accommodate these demands and obviously we can't resolve demands in all sectors but we are making an effort and we are currently waiting for approval on certain pockets of land. We're busy looking at land for gap or social housing and we've got two property developments planned accordingly." When speaking of gap housing, he says it is property that falls roughly in the R300k to R600k bracket.

One such piece of land identified for gap housing is 10ha in size; Kuchar says the council is awaiting approval and that a tender can be expected to be released within the next few months.

Concerning the shortage of intermediate housing in Hermanus specifically, he suggests that very little can be done there as "Hermanus is close to being fully developed." A more feasible solution that the municipality employs is that of building more lavish residences on the pricey (and scarce) Hermanus land that is left and utilising the financial "spin off" from such developments to subsidise gap housing in surrounding areas. "We are not doing nothing, we are also looking at building townhouses and flats that are more affordable." Kuchar concludes.

Bobby von During, manager of housing and community development echoes Kuchar's sentiment and speaks of the Overstrand Municipalities' efforts to satisfy the affordable housing demand. His department is reportedly dealing with several affordable housing initiatives in areas surrounding Hermanus.

The first is a development in nearby Hawston that will consist of 66 affordable units, 45 of these units have been granted by Absa bank. "Construction hasn't started but thirty five applications have been approved by Absa Bank," says von During. He adds that the income criteria to qualify for a house in this development ranges between R3500 and R10000, "the bank decides the rest of the criteria as they are carrying the risk."

Another intermediate housing project in the pipelines is to be situated in Mount Pleasant which is about 700m outside of Hermanus. There is a piece of land that is earmarked for 40 gap houses and according to von During engineering consultants have been appointed to asses the area in terms of extra infrastructure that might be needed for construction as the development will be built against a mountain. Construction will begin as soon as technical issues have been finalised.

It seems the need for affordable housing is as strong in Hermanus as the rest of the country. Builders and developers are eager to get actively involved in this market provided sufficient land is made available. The responsibility now lies with the Municipality to deliver. – Ntokozo Maseko

*Data based on transfer dates (and not sales) of houses from R100k to R300k.

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