Insight

Eastern Cape’s housing market remains resilient despite the Covid-19 lockdown

The residential property market in the Eastern Cape has remained surprisingly resilient during the unprecedented times the economy currently faces, says Pam Golding Properties.

Encouragingly, during the first quarter of 2020, even as national house price inflation continued to slow, the Eastern Cape has shown modest strength from a low of 2.9% in February 2017 to average at 4.8% for Q1 (latest available data – source Lightstone), compared to the national average of 2.6%. This is compared with the Eastern Cape’s average house price inflation of 3.9% during 2019, says Sandra Gordon, Pam Golding Properties senior research analyst.

“Notably,” says Gordon, looking at the metro markets, house price inflation in Nelson Mandela Bay is on a par with Cape Town during Q1 of 2020, at 4% compared with Cape Town’s 4.1%. Furthermore, Nelson Mandela Bay’s house price inflation is on an upward trajectory and may even outperform relative to Cape Town in the second quarter, given that house price inflation is slowing in the Mother City.”

In the sunny seaside town of Jeffreys Bay, popularised by surfers via the iconic 1966 movie, Endless Summer, despite initial trepidation that the market would experience a downward trend due to the COVID-19 crisis, the demand for residential property in J-Bay, as it is fondly known, has held its own. Positively, there have been numerous enquiries for properties to purchase, with a surprising number of sales concluded during the lockdown period – with some subject to viewing and others without suspensive conditions – in other words purchased ‘sight unseen’.

Says Pam Golding Properties area principal and sales manager, Jaco Bothma: “During the lockdown, including the period prior to viewings being permitted, here in ‘J-Bay’ we concluded seven transactions to the value of R8.7million, ranging from vacant land at R120 000 to a beachfront vacant plot which fetched R3 million.

“Buyers during this time recognised there were properties offering good value, prompting them to make purchase decisions and conclude their transactions. An example is the sale of a four-bedroom, three-bathroom, double garage property with sea view situated in Wavecrest, for R1.325 million.

“Surfing spots, beachfront properties, coffee shops and restaurants abound, all set around a proliferation of appealing open spaces, creating a magnet for families and an ongoing demand for residential and/or holiday accommodation. This is particularly true for those wishing to move away from large busy metros, and who now have been afforded the opportunity to work from home instead of being office bound,” says Bothma.

In Port Elizabeth, the company’s joint area principal, Justin Kreusch, reports a marked uptick in June (2020), concluding over 30 sales, including two in excess of R4 million each. “Interestingly, in regard to these two sales, one is a property that had been on the market for three years with no offers whatsoever, which attracted an offer which translated to 94% of asking price – quite a feat given the time it had been on the market. The other was a property we listed a few months prior to lockdown which sold for R5 million, a full asking price offer.

“In addition, we haven’t seen any erosion of prices, in fact we’ve concluded a number of sales where properties have sold at full asking price within a few days or weeks of having been listed. In one instance a property was listed on the Wednesday, attracted 15 viewings by the Saturday and no less than five offers, and sold at R30 000 above asking price. Last year we had a property on the market for R425 000 and it wouldn’t move – we put it back on last week and received an offer in excess of R450 000 within days.

“We’re also seeing the demand for student accommodation continue, as well as high demand from first-time buyers seeking their first home, with the low interest rates contributing to this,” adds Kreusch.

Richard Arderne, Pam Golding Properties area principal in St Francis Bay, also reports a couple of residential properties purchased ‘sight unseen’ during the lockdown, by buyers in Holland and the USA, while other ‘sight unseen’ offers were received from Gauteng buyers. “While April was quiet with only one sale, we did eight sales in each month of May and June, bringing our total sales turnover for March to June to R41 million. These include upmarket homes – a R4 million house ‘on the rocks’ in Otters Landing sold to a Gauteng couple for their retirement and R3.45 million for a second row house, to a young Gauteng couple for holidays.

“Bordering the Shark Point nature reserve and with an unspoilt coastline, the suburb of Santareme is experiencing substantial interest among home buyers, with four houses sold since early May in the price range from R1.5 million to R4 million.

“Since returning to the office at the start of level 3, we’ve seen plenty of enquiries from abroad as well as Cape Town and Gauteng, responding mainly to properties below R3 million. A well-priced house priced at R2.6 million had 10 solid responses in 48 hours and five one-on-one viewings – observing all the required health and safety protocols – in just 24 hours.

“There are about 10 developers active on St Francis Links, mainly building entry level spec houses at around R2.5 million, which they rent out if they aren’t bought soon after completion. There’s also been pleasing demand for Oyster Bay Road smallholdings, with two recent sales at around R2.5 million each, and many other enquiries. Industrial properties too are seeing good interest, with a sale of a storage facility in March.

“We source a large proportion of buyers from Port Elizabeth at the moment as they are easily able to travel here, with the current travel restrictions. Many are spending more and more time here, especially couples in their 50s and older – some trading their properties a few times, either to take a profit or to suit their changing needs. Some choose to retain a smaller home in ‘PE’ and make St Francis their bigger investment.

“Increasingly, we see how St Francis Bay has evolved from mainly a retirement resort in the 1990s to a permanent home for working people – more of whom are working remotely, or a holiday home for others, as well as still being a retirement destination for many.”

In Port Alfred, Pam Golding Properties area principal, Isobel Meyer, reports 35 homes sold through the agency since the start of lockdown. A few highlights in price and property trends have been a property in Kleinemonde which we sold for R5.75 million, six sectional title units in the Settler Sands Beachfront complex sold priced between R655 000 and R750 000. There’s definitely an uptick of interest in our high end which includes properties priced upwards from about R3.5 million, and the conclusion of an increased number of vacant land sales which shows promise for future residential development in our area.

“Freehold properties priced between R800 000 and R1.75 million continue to be a favourite and are currently in demand for first-time home buyers, retirees and middle-aged buyers looking to relocate. Recently we have experienced a surge in interest from those looking to relocate to our area from upcountry, Grahamstown and East London in particular. There’s also increasing interest from those looking to work remotely and either purchase or rent a suitable property,” says Meyer.

Pam Golding Properties East London office is equally upbeat. Says area principal Sean Coetzee: “There’s a buzz in the air with numerous enquiries and sales being concluded, not only as a result of the pent-up demand but also as a result of the low interest rate. During April and May we sold 10 properties, including a home sold ‘sight’ unseen’ to a Johannesburg buyer.  A highlight during lockdown was a home in Glen Gariff which fetched R5.3 million. There’s a lot of interest in estates, such as Olivewood and Khamanga Bay, with buyers seeking more space and less people as a result of Covid-19. While interest is across the board, mainly in the R950 000 to R1.6 million price bracket, we are also receiving enquiries in the price band from R3 million to around R4.3 million.”

Michael Wilmot, the company’s area principal in Kenton-on-Sea, echoes Coetzee in regard to the demand for vacant land, for well-priced plots below R500 000. “We are also experiencing good demand for houses priced up to R2.5 million, with buyers looking for value for money.”

In Oudtshoorn, Pam Golding Properties area principal, Jacques de Beer, says interest in Klein Karoo properties is reaching new highs. “During level 5 of the lockdown we sold five properties, ranging from a 1 100sqm vacant stand at R299 000 and a two-bedroom cottage for R410 000 to a five-bedroom river frontage property for R2.1 million.

“Since June we have had far more interest than any of the previous 12 months, viewings have almost doubled and we have seen an increase in buyers from Gauteng, Free State, KwaZulu-Natal, the Eastern Cape and Cape Peninsula, and even have a purchaser from as far afield as Dubai. We’ve noted that some buyers from up North have decided that Oudtshoorn is the new home they’d like to work from, while others taking early retirement are also finding value in property here, as houses priced between R700 000 and R1.4 million are selling quickly and are in high demand.

“In June we concluded nine further sales and apart from other enquiries and sales in regard to residential property, are currently negotiating two commercial property sales each in excess of R4 million.”

Low interest rates and value for money are key factors fuelling high demand from first-time home buyers in Grahamstown, according to area principal, Daphne Timm of Pam Golding Properties. “Positively, we concluded 17 sales during the lockdown, the bulk to first-time buyers as well as several investors acquiring sound buy-to-let residential properties. A further three sales have just been finalised with additional deals being negotiated. Heightened interest in the market up to R1.2 million is seeing as many as five offers on a property priced at R995 000. We are optimistic regarding the market in the future as there is an ongoing demand in this sector of the market.”

For further information contact Pam Golding Properties via headoffice@pamgolding.co.za.

Posted by The Know - Pam Golding Properties