Imagine being born and raised in a small town or village that you love, and not being able to buy your own home there because out-of-towners with big bank accounts snap them up. Well, this is the reality for many people around the world, including South Africa.
In England, a 36-year-old man in a small village in North Yorkshire, told IOL that property shortages have always been a problem for locals who want to buy in the area. However, over the past two years, any available properties have been bought by affluent people from London and other major cities.
“And some of them do not even come to live in the properties. They don’t rent them out either. They just stand empty and the owners will check in on them once or twice a year.”
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If stock shortage was not already enough of a problem, he says the increasing prices of homes – due to the demand from semigrants and remote workers – means young and middle-aged buyers who want to continue living in their home town have little hope of affording a property now.
In South Africa, not all small towns and villages that have become popular for remote workers over the past two years are seeing the same effect, but some undoubtedly area.
Carola Koblitz, a journalist who specialises in property economics and has been living in Napier – a small town in the Western Cape’s Overberg region – for the past three years, has “definitely” noticed a rise in prices, particularly over the past 12 months.
“Three years ago, there were, for example, a number of houses on small holdings across Napier still under R1 million, but this is now extremely rare.”
Prices for the majority of homes in Napier that get sold relatively easily now, range between R1.5m and R2.5m – depending on the size, condition, and location.
“The boom really started to happen around 18 months ago, with people semigrating here, especially from Gauteng and Cape Town. And over the past year, you can really see how prices have risen.”
Hermanus in the Western Cape is another town where property prices and demand is having a negative impact on local aspiring buyers. Mark van Vuren, franchisee of Rawson Properties here, says there has been an influx of buyers to the area due to the increase in remote working. Some buyers have purchased property for their primary residences while others have bought homes as holiday or investment properties.
“We also see mostly accountants and IT professionals that can really work from home either buying or renting. Wealthy Johannesburg people are buying properties as secondary homes, working six months in Hermanus and six months back in Joburg.”
He says house price growth has therefore increased dramatically as demand is high and stock is scarce.
“There’s at least a 10% to 20% increase in property prices, especially for entry-level properties. Luxury property prices have increased by 10% to 15%. Well-priced property is hard to come by, especially sectional title homes. As soon as a sectional title property hits the market that is in the range of R1m to R1.5m, it is immediately snatched up.”
This situation is receiving mixed reactions from Hermanus locals as those who are selling their properties are “smiling all the way to the bank”, but younger people are finding it “more challenging” to enter the property market. This is because of the rising prices and the fact that available properties are being snapped up by cash-ready buyers who are often from other provinces.
“So there are, indeed, insufficient well-priced properties which the locals can afford,” Van Vuuren says.
Since mid-2021, says Nancy Massing, managing director of the Lew Geffen Sotheby’s International Realty Cape Peninsula franchises in the Western Cape, there has been a “notable uptick” in enquiries across the whole region, from Muizenberg to Noordhoek. Property is being sought by both local and upcountry buyers.
“The suburbs attracting the most interest from upcountry buyers, are Noordhoek, Kommetjie, and Simonstown, which all offer exceptional lifestyles.
“There was price escalation in 2021 and first quarter of 2022, but prices have now stabilised, largely due to the fact that local purchasers are resisting further increases due to affordability.”
The agency’s Noordhoek area specialists, Lilian Bron and Linette Kempster, say there has been an obvious increase in demand for properties here, particularly within gated estates. However, despite the high demand, prices aren’t increasing as much as before, largely due to buyer resistance. Well-priced homes and also land are selling quickly though, and stock is becoming very low, they say.
In Kommetjie, Lew Geffen Sotheby’s International Realty’s area specialist Natalie Cooper says house prices have “sky-rocketed” since the start of lock down, due to the high demand of buyers and insufficient stock.
“During the past two years, we have seen some unprecedented prices...Some residents are finding the influx of new people to the area a bit challenging and hope the village will maintain its charm and slightly rural feel.”
She adds that, due to the price increases and stock constraint, locals are finding it difficult to repurchase in the area in certain instances.
“The younger generation that has grown up here is also finding the increase in prices is making it harder for them to get into the property market.”
In KwaZulu-Natal, the north coast town of Ballito has always been a sought-after holiday destination, says Roelof Faul, franchisee for Rawson Properties in the area. With the new way of working from home, however, many people are seeing it as an opportunity to incorporate it with their lifestyles.
“The property market has boomed since lockdown. With the demand exceeding the supply, most properties sold at asking price compared to the general trend of sale prices being 10% or 15% below asking price.”
Fortunately, as there are many new developments taking place in the area, quality gated estates help relieve the demand for homes, he says.
Sabrina Errico, Lew Geffen Sotheby’s International Realty broker principal in Ballito and Umhlanga, agrees that the Dolphin Coast has been “in high demand for a while now”, and says well-priced properties are often selling within a week. The area is therefore starting to experience stock shortages.
“We’ve also sold many a new listing before we’ve even had the chance to upload it to our website, with most of these quick sales being homes in secure estates which are highly sought-after by clients who are relocating from Gauteng as they tend to prioritise security above other features.”
Since the start of lockdown in 2020, she says the prices of homes in Ballito and surrounds have “stood their ground”.
“Once we started to emerge from Covid, market activity quickly rebounded and we found we were tripling our sales.
“The location of the airport has also positively impacted the area as many of the professional people who have relocated their families to the coast still need to commute to Gauteng regularly, and it’s much easier to do so now. Already a trend prior to the pandemic, there has been an uptick in semigration to our area in the past year.”
Errico notes that most new property owners are not locals and have never lived in the area. And as entry-level property prices are about R1.5m, most first-time buyers will require an income of R43 000 a month, and there are not many properties available in this price range.
“A freestanding home outside the estates is difficult to find for under R3m, and even then, the buyer’s income would need to be R85 200 – it’s a difficult entry level for most.”
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