Bronkhorstspruit’s property market is booming thanks to an influx of new permanent residents and contractors on long contracts at Eskom’s Kusile power station - but strong rental demand is leaving family buyers high and dry.
This two bedroom house in Bronkhorstspruit is selling for R1.2 million through RealNet Properties Kungwini. Click here to view.
The shortage of stock in the R850 000 to R1.2 million price range is becoming critical, and new development of standard family homes and three bedroom townhouses is sorely needed, says Koos Pretorius, owner of the RealNet Kungwini franchise.
However, developers are now concentrating on the lucrative rental market and new development is specifically aimed at satisfying the strong demand among contractors at Kusile, he points out.
Several blocks of two bedroom flats have been built in the past two years and units are rented to contractors at between R6 000 and R8 000 a month.
Equally, sellers have unrealistic price expectations on the back of high rentals and are struggling to find buyers at inflated prices in spite of stock shortages.
Pretorius says it is not uncommon for sellers to market homes valued at R1.3 million for around R1.7 million.
“While desperate buyers may be prepared to pay inflated prices, obtaining finance is very difficult since lending institutions will only grant bonds according to the real market value.”
Many sellers have withdrawn their properties from the market and have become landlords because they can charge rentals equal to around 1 percent of the value of the property, he says.
At the same time, Bronkhorstspruit is a dormitory town of note, with about 95 percent of current residents working elsewhere.
The town’s infrastructure, rural atmosphere and proximity to large shopping centres in Pretoria’s far eastern suburbs are attracting buyers who are prepared to commute daily to surrounding towns such as Kriel, Ogies and Witbank, says Pretorius.
“The trend is likely to continue and developers who bring suitable family homes to market at realistic prices will find ready buyers,” he says.
Meanwhile, agents report that business is brisk in the sprawling Mdantsane residential area between East London and King Williams Town, thanks to low home prices and more 100 percent bonds being granted by financial institutions.
Located in the township of Mdantsane in East London, this two bedroom house is priced at R300 000 through Harcourts Cornerstone. Click here to view.
Home to about 3 million people, Mdantsane offers traditional two bedroom township homes priced between R250 000 and R300 000 and upmarket three bedroom, two bathroom homes with modern kitchens at prices of up to R800 000, says Lance Gouws, owner of Harcourts Cornerstone in East London.
“There is great demand for these properties among government employees and other institutional buyers because bond repayments for starter homes are about equal to the cheapest rentals,” according to Gouws.
What’s more, banks see excellent underlying value and most buyers are being granted 100 percent bonds, which makes homeownership a possibility for many more first-time buyers, he says.
Expanding its estate agency services to the area has seen Harcourts Cornerstone notch up its best financial year ever, says Gouws.
“We decided to expand operations to Mdantsane after several clients who were buying homes in East London wanted to sell their homes in Mdantsane but reported that they were struggling to obtain estate agency services.”
As a result, he says they have since implemented fundamental changes to their business plan to cater for property consumers in Mdantsane, and have increased the number of agents to 22, about a third of whom specifically serve Mdantsane.
“We have also started an agent mentoring programme, which includes in-house training on top of legislated training, and the Harcourts national training programme, for members of previously disadvantaged communities in our feeder area.”
Gouws explains that the lively Mdantsane market augers well for the greater East London property market and it is an ideal first-time buyer market thanks to affordability, pointing out that they expect demand for homes to feed through to city properties when owners start upgrading.
He says an interesting phenomenon is that some former Mdantsane residents who previously bought city properties are selling up and moving back to the area because of strong family ties.
Another reason is the excellent value to be had - spacious family homes are selling at prices 10 to 20 percent lower than equivalent city properties.
However, there is healthy demand for comfortable family homes in the city at the R1.2 million level and there is currently a general stock shortage in the lower to mid-range price brackets, although there is plenty for sale at prices of R2 million and above, he adds.
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