Various statements from the Southern Cape’s spokespeople for the residential property sector indicating that their area is now experiencing a remarkable property boom are, says Stephen Lubbe, co-franchisee with his wife Mariaan for the Rawson Property Group’s George franchise, true but possibly misleading.
“What is undeniable,” said Lubbe recently, “is that George is now more popular than ever before: over 50% of our buyers today are from other towns and cities, especially those in the north, and a large proportion of these are disillusioned with the crime situation, the standards of public service and the education available to their children in the areas where they now live.”
“In their view George offers the solution to all these difficulties. They do, of course, recognize that we too are not without our problems, but they see the conditions under which we live as being infinitely preferable to those where they currently are.”
The big demand, said Lubbe, has resulted in steady ongoing price rises – not as yet in greatly increased sales, though these could come in two or three years.
“In 2014 there were in George 858 freehold property sales and 90 sectional title sales. By my estimates the 2015 figure will be much the same.”
On the price front, said Lubbe, there has, as indicated, been a steady growth: in 2013 the average price of a George home was R659,000. Today Lubbe puts it at around R730,000.
These figures, said Lubbe, can be misleading because they often include homes brought to the market at the low end and while it is true that 50% of his sales recently have been for homes priced below R1 million, among the middle class buyers, the big demand for homes is in the R900,00 to R1,5 million bracket, with special emphasis on those priced around R1,2 million.
This franchise, now in its fifth year of operation, has many far more expensive homes on its sales list. These, however, said Lubbe, tend to ‘move’ very slowly – only 6% of his 2014 sales were above R3 million. Nevertheless there are many homes in the area with values of R5 million to R20 million and the time will come, he believes, when the market will catch up with these.
Lubbe said that as a general statement it remains true that the middle class buyer in George is still able to find real value for money: perhaps 30% more floor area and 40% more garden than they would typically get in Johannesburg or Tshwane.
Similarly, said Lubbe, if the buyer opts for a stand without a home on it, he is likely to be able to get it at between R250,000 and R550,000 and to be able to build at a significantly lower cost than he would pay in South Africa’s big cities.
Where to from here for George housing?
Lubbe said that he sees no signs of the inflow to the area slowing down – in fact, he said, the number of enquiries fielded by his team in the holiday season was the highest that they have ever experienced and he is confident that what George can offer, especially in the way of lifestyle, climate, sporting facilities and above all security and good education, will seem even more desirable to many South Africans in the coming years. For this reason, he predicts, the slow price rises now being experienced in the middle brackets will continue steadily.