Property boom in townships
Cape Town - With rising interests rates and the threat of South Africa’s sovereign debt being downgraded to junk status, estate agents in Cape Town’s townships say their trade is far from depressed.
In Khayelitsha’s Litha Park, there is significant construction activity, not from the government but private investors hoping to make a profit from the demand for housing in an area that sees itself as a suburb.
In Mitchells Plain, estate agents are battling to find houses for sale and some houses have gone for R900 000, which used to be an unheard of figure. Estate agent Wiseman Masilo has been trading in property for the past 14 years.
“We are busy, lots of clients want to sell their houses because they are moving to better areas like Kuils River and Blue Downs,” said Masilo.
Homeowners were also selling because of unemployment and they wanted to raise capital for business ventures or to downscale and move back to the Eastern Cape.
Masilo said there was an increased demand for rental housing units in Khayelitsha, with most of these being built by private investors who already owned property in areas like Litha Park.
“Many people are applying for second bonds and using that money to convert their houses into multiple dwellings, building flats,” said Masilo.
And while the City of Cape Town had previously turned a blind eye to construction, Masilo said officials had now started to clamp down.
City spokesperson Priya Reddy said its building inspectors would routinely visit building sites to investigate complaints submitted about suspected illegal building work and land use contraventions. “We encourage the community to report suspected illegal building work. Where contraventions have been found, the City will take the necessary action.”
Masilo said: “People are renting out their properties in the hope of making money from the demand for housing in this area. Tenants are usually too indebted to be financed by banks to buy property, so renting is better than putting up a shack in a squatter camp.”
Katiso Motale, who also sells properties in Khayelitsha, agreed:
“Young people are entering the labour market and they can’t afford to buy so they rent instead.”
Down Spine Road, in Mitchells Plain, estate agent Jonathan Jacobs is literally knocking on doors, trying to see if he can get homeowners interested in selling. In between juggling calls on his cellphone, Jacobs says: “The demand for property is unending and it ranges in price from R350 000 up to R750 000. And you can get some properties here (in Mitchells Plain) in the million rand range.”
So buoyant is the market Jacobs says he recently sold a house for R910 000, “and it was done within 30 minutes”.
Mitchells Plain estate agent Wayne Therons said his buyers were not yet feeling the impact of interest rate hikes. “People here in Strandfontein sell their houses to upgrade, and most of them leave to live in the northern suburbs where the stands are bigger.”
FNB property economist John Loos said the housing market has been stronger, with higher price inflation a factor, but in recent years it has been slowing.
Government-funded township revitalisation programmes were factors which had positively affected property values.
“What is still lacking in townships is that they don’t have big economies and a lot of professionals move away. We need a lot more mixed-use industry to be established,” said Loos.