The shortage of suitable rental property in mining towns like Lydenburg and Middelburg is largely impacted by uncertainty in the mining sector and as a result investors are unwilling to develop in these areas.
Anna-Marie de Jager, Seeff’s Managing Director in Lydenburg, says their branch receives an average of six applications per rental home priced between R4 500 and R6 500 per month.
She says this price range is in high demand and is usually from people who have been transferred to Lydenburg or from contract workers. “Since not all mines supply housing for their employees, they are forced to rent.
“Most tenants are looking for family homes with three bedrooms and a small garden where children can play and where they can keep a pet.”
The problem, however, she says is that there are no houses for around R6 500 per month and tenants have to settle for townhouses, and buying a property is also out of the questions because of job uncertainty.
De Jager continues that she has approached many developers to discuss investing in Lydenburg, but they feel the risk of ending up with vacant developments is too high because of possible market fluctuations and retrenchments.
“While there is plenty of vacant land available for development, obtaining services from the municipality is another consideration for developers.”
De Jager says the more expensive rental properties in Lydenburg, priced between R12 000 and R15 000 per month, are usually rented by senior employees like managers, but are often vacant for long periods because of the high rental amount.
Willemien Badenhorst, Seeff’s Managing Director in Middelburg, says they too are experiencing severe stock shortages in rental property.
“With regard to rental property shortages our biggest demand is for property priced between R7 000 and R9 000 per month, but we also have high demand from buyers who want to obtain modern, full title property in the price range between R500 000 and R1.3 million.
“Those interested in buying property are usually employed by government departments or Eskom, while most people looking to rent work for mines on contract basis and are uncertain whether their contracts will be extended”.
Badenhorst says there are three developments underway in the town at the moment, but that there is still a big need for more strategically located developments.
“Unfortunately, like in the case of Lydenburg, investors here are equally hesitant to invest, even though Middelburg has ample land available”.
Badenhorst says Middelburg’s rental market is in dire need of affordable, pet friendly rental accommodation and developments priced below R1 million where 30% is allocated to low cost housing.
In contrast, with Lydenburg and Middelburg, the mining town of Rustenburg is currently experiencing an oversupply of homes in both the sales and rental market.
Elsje Stander, Seeff’s Managing Director in Rustenburg, says while there were shortages in both these markets three years ago, the situation has now changed dramatically to that of an oversupply.”
The mines here are going through tough economic times because of Platinum’s record low prices and labour unrest in the industry. Where the mines rented private houses for some employees in higher positions in the past, they have given these houses back in mass and are selling their own houses after staff retrenchments.”
Stander says property prices in Rustenburg have normalised and are currently on a low because of the prevailing oversupply.
“We often find that sellers are willing to accept just the outstanding amount on their bond when selling their homes.
“There are still some developments taking place in Rustenburg even though vacant land is scarce and expensive. These are mainly in the one million rand and lower price range and for first-time buyers who buy directly from the developers. Buy-to-let investors are much less active than a few years ago.”
Existing developers paid high prices for vacant land a few years back and find it tough to get a return on their investments, and as a result some developers have pulled out of Rustenburg all together, says Stander.
The main economic driving force in Rustenburg is the mines and associated industries. The general industry opinion is that Platinum is on a cyclical low and will recover in a few years’ time”.
Stander says the only property type excluded from the current oversupply in Rustenburg includes one bedroom and bachelors type accommodation that are both experiencing high demand.
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