Semigration and impressive house rate growths - Why the Eastern Cape is the place to be
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Johannesburg - The Eastern Cape may well be South Africa’s most desirable place to live, especially for women wanting to buy their first home and former tenants who can now afford to pay a bond.
House price growth in the province is at 8.3% – making it the top performing region in the country, according to Lightstone property data for the month ending June 2021.
The CEO of BetterBond, Carl Coetzee, said coastal properties historically showed stronger house price growth, but the Eastern Cape’s standout house price inflation – which had increased from the 5.6% it was at the beginning of 2020 before the pandemic – indicated that changing buyer behaviour and lower interest rates were having an impact.
BetterBond Eastern Cape sales manager Erica Venter added that much of the Eastern Cape’s buyer activity was in Gqeberha where a strong demand for sectional title properties pushed up house prices.
“Sectional title house prices have increased by 11% year-on-year, largely due to the demand for affordable homes in new developments,” she said.
Venter added that 74% of its customers in Gqeberha’s sectional title market were first-home buyers, and 62% were women.
“The need for a modern, two-bedroom unit close to amenities, schools and the arterials seems to be insatiable. For every client who registers a bond, we have pre-approved on average five other buyers for the same property, ready to buy a similar property.”
Coetzee said they were seeing this price escalation reflected in their bond applications, where the average home purchase price in the Eastern Cape had increased by 10% year-on-year for the period ending July 2021.
“For first-home buyers the average purchase price has increased by 9%. Buyers can now afford upwards of 30% more than they could early in 2020, when the interest rate was at 10%.
“The interest rate has held steady at 7% for more than a year, creating the ideal lending environment for aspirant buyers who previously could not afford to buy their own home.
“The Eastern Cape is a shining example of how lower interest rates can impact demand and house price growth,” he said.
Paul Stevens, CEO of Just Property, said entry-level buyers, of homes of less than R750 000, also benefitted from the many new developments that offered savings on transfer duties and the opportunity to buy off-plan.
“Developments in Fairview, Walmer and Overbaakens are ideally positioned for this market and as such, the province’s activity is being fuelled by previous tenants who can now buy for much the same monthly cost as they can rent,” he said.
Kobie Potgieter-Mattheus, of RE/MAX Independent in Gqeberha, added that the plethora of new developments had contributed to increased market activity in Gqeberha.
“Unlike other parts of the country that are experiencing a low supply of homes, with a high demand from buyers, we have an influx of quality, modern and affordable new homes.
“The favourable response from buyers can be seen in the 20% year-on-year increase in the average selling price by RE/MAX agents in the area.
“That being said, average house prices in Gqeberha are still comparatively lower than other provinces and this offers buyers migrating from other provinces greater value for their money,” she said.
Experts said semigration had increased in recent months as the shift to remote working encouraged more people to place a greater premium on quality of life. Another benefit was that Gqeberha was home to some of the best private schools in the country.
“Also, after the recent riots, people are looking for safer options in a slower-paced setting,” said Potgieter-Mattheus.
It is not just Gqeberha that is enjoying a boom. The Eastern Cape’s coastal towns – especially Jeffrey’s Bay, St Francis, Kenton and Port Alfred – appeal to those who want to relocate and work from home, especially younger families who want to live close to good schools. These towns, within a convenient distance from the Chief Dawid Stuurman International Airport in Gqeberha, also offer excellent amenities.
Infrastructure investment in the province has created exciting opportunities for growth. Projects such as the Port Elizabeth Waterfront Project, Coega Special Economic Zone (SEZ) and the East London SEZ have reignited consumer confidence.
“No longer viewed as just a holiday destination, the Eastern Cape’s value-for-money offering appeals to buyers wanting a coastal lifestyle.
“A slew of new developments, and record-low interest rates, means that a new generation of home owners is coming into the Eastern Cape’s residential property market, and this augurs well for this region’s economic growth,” said Coetzee.