While bank lending criteria are currently less stringent than they were at the beginning of the year (2013), limited access to finance coupled with issues of affordability, particularly in regard to raising sufficient funds for deposits, are driving the demand for homes to rent in the Port Elizabeth area, reports Pam Golding Properties (PGP) area principal Ian Olivier.
“Rentals in the R4500 to R8000 per month price range are being snapped up within days, if not hours of being listed,” says Olivier. “Accordingly there is a shortage of stock in this price bracket which suggests an opportunity for buy to let investors. Depending on location, the average rental for a two bedroom flat is around R4500 a month, while a family-size house on a generous erf of around 1500 square metres will command a rental of R7000 to R9000, again depending on area and proximity to schools.”
He says currently the highest demand is for the lower and middle markets in Lorraine and Newton Park, with high demand for rental homes in Walmer from those with more spending power. Generally the most sought after price range is for homes to rent from R5000 to R8000 per month.
Buy to let opportunities
“In Lorraine you can expect to pay between R750 000 and R1 million for a three bedroom house, for which you can anticipate a rental return of R5000 to R8000, which makes this a sound proposition for a buy to let investor,” says Olivier.
He says for first time buyers there are some well-priced options, such as loft studios ranging from R350 000 to R495 000, depending on the area, and two bedroom units selling from R400 000 to R600 000, again area dependent.
“Buyers with deposits of at least 10 percent or more and good credit records are well placed to secure the most competitive interest rates and prime is a definite possibility for this category of purchaser, which may include first time and investment buyers. There is an even better chance of being granted a bond at an optimum rate if they are pre-qualified.
“We advise first time, buy to let investors to remember the key watchword, location, and aim for a return on investment in terms of both the short and long term – in other words monthly rental income and capital growth. Real estate has long proven a sound medium to long term investment vehicle, as long as you do your homework with regard to where the demand is coming from.”
Olivier offers some sound advice: “Talk to a good rental agent who is knowledgeable, experienced and with a reputable real estate agency – who can advise you on the appeal of the property and its location as well as the expected rental, and work on trying to achieve rental to match your bond repayments. Within a few years the property should be paying for itself and accruing in terms of capital value.”
He says as a rough guide, annual return on investment should be upwards of five percent of the purchase price, and this naturally excludes the benefits of capital growth on the property. “We are finding that buy to let investors are returning to the market place and that the majority of those whom we assist have a significant deposit if not the full amount in cash.”
Commenting on general trends in the property market in ‘PE’ at present, Olivier says there is an ongoing demand for well-priced seafront property in good areas such as Humewood and parts of Summerstrand.
Upgrades boosting interest in the area
“What is boosting interest in recent times is the upgrading of the PE beachfront and the Boardwalk Centre with its new 5 Star hotel and conferencing centre. Significant investment here has resulted in a unique, very upmarket, vibrant area, and with its pristine beaches, it is very attractive to those seeking a seaside lifestyle. There is also more interest in the revitalised parts of the CBD, ie certain parts of the central area and Richmond Hill, areas which are being reinvented and are now trendy and cosmopolitan thanks to the upgrading of properties and growth of a vibrant restaurant belt; home, gift and antique shops, specialist bakeries and numerous dining options – including al fresco, and of course the architecture. Many of the houses ooze old world charm and are characterised by Victorian facades, cast iron railings, sash windows, wooden floors, high ceilings and the like and also have small, low maintenance gardens,” says Olivier.
In the middle market PGP reports that in areas such as Charlo, Lorraine, lower to mid Walmer and Newton Park, homes in the R1.2 million to R1.5 million price range are most popular. “At the top end homes fetch up to around R16 million but average at about R6 million, which will buy a large, well maintained upmarket home at a prestigious address and with four bedrooms (at least on en suite and with a further family bathroom plus guest bathroom), three or four living areas, good entertainment area to pool, double or triple garage and good security. Prime locations include upper Walmer, Mill Park, old Summerstrand, Humewood and Lovemore Heights,” he says.
“One of PE’s best buys right now is a modern double storey house in Walmer overlooking the Baakens Valley and out to sea. Designed by renowned architect Ron Hicks, this immaculate 1000 square metre house includes an indoor heated pool, music room overlooked by a gallery and other notable features. The price has been reduced to R5.75 million, which is under replacement cost,” says Olivier.
For further information contact Pam Golding Properties Port Elizabeth on 041 3739955, Ian Olivier on 083 650 2913 or email email@example.com.