Push for sub-R2m homes23rd Mar 2018
Millennials entering the market drive developer demand.
The clamour for homes in the R 1.5 million to R 2 million price bracket is growing. More property developers are expected to target this market in 2018 to take advantage of the trend, predominantly driven by first-time buyers under the age of 35.
“These properties are in great demand,” says Leapfrog’s CEO Bruce Swain. The 2018 Leapfrog Property Market Forecast predicts that the sub-R2m market is expected to be one of the best-performing segments.
Seeff Properties’ Chairman Samuel Seeff says the robustness of the sub-R2m real estate band is mainly concentrated in SA’s major metros, Johannesburg and Cape Town in particular.
“Both are seeing a notable influx of people from other areas. Johannesburg has the highest influx of people coming from the countryside looking for economic prospects, while Cape Town has people coming in from other areas. All of this has naturally meant a notable uptake in the demand in the R 1.5 million to R 2 million sector.”
“Considering that these properties are more affordable for first-time buyers and that no transfer duty applies to properties bought off plan — everyone wins” says Swain
Amdec Property Developments’ MD Nicholas Stopforth says the luxury market is feeling the heat. “While developers are bringing new products to the marketplace across a range of price bands, many are specifically targeting the R 1.5 million to R 2 million bracket. This trend will continue as the luxury market is under pressure.”
When it comes to Gauteng’s sub-R2m real estate market, Johannesburg’s northern suburbs stand out. Data by Seeff shows that the demand is predominantly concentrated in Randburg (North Riding) and Edenvale (Hurlyvale, Highway Gardens, Eastleigh and Illiondale).
In the south of Johannesburg, Alveda Park, Kibler Park, Mayfield Park, Winchester Hills, Ridgeway and Ormonde are prominent. Centurion near the Gautrain stations is in high demand, too.
In Cape Town, suburbs near the city centre – including Observatory and Woodstock – and the Northern Suburbs are good sub-R2m targets.
“In Cape Town’s city centre and along the Atlantic Seaboard, this price does not buy you much,” says Tyson Properties’ City Bowl office manager David Terry. Buyers with this budget are looking further out of town for better affordability.
“If they want to buy in the inner city they will be buying a ‘fixer-upper’. Developers in Observatory and the Southern Suburbs such as Kenilworth will target this price range for their more affordable units,” says Terry.
Seeff Properties’ manager for Cape Town’s Northern Suburbs of Brackenfell, Kraaifontein and Kuils River, Karla Coetzee, says first-time home buyers under the age of 35 drive demand for real estate at less than R 2 million in Cape Town. “In Kuils River, 40% of buyers are under 35 years old. They are after entry-level prices of about R 980 000 for full title houses and R 500 000 for flats.”
In Kraaifontein, 37% of all buyers are millennials, says Coetzee. “Prices here range from about R 600 000 for apartments and R 1.1 million for houses. The growth rate in Kraaifontein has been phenomenal. We hope to see more of this in 2018.”
Stefin Strydom from Somerset Lakes commented; “With current demand for estate living focused on the Western Cape, Somerset Lakes, a “premier lifestyle estate” – continues to provide buyers both within the province and from “out of town” an ideal buying solution.”
The popularity of lifestyle estate living is on the rise in the country as South African home buyers are attracted to residential developments that offer both security and lifestyle amenities, such as leisure, schooling and sporting activities. “Lifestyle and security estates also offer buyers a sound investment opportunity that is likely to grow in value over time.”
The exclusive Somerset Lakes is situated in one of the last remaining sections of a residential zone in close proximity to the Hottentots Holland mountain range, the coastal region as well as the one of the Western Cape’s finest winelands. Offering buyers a range options from freestanding homes, townhouses to apartments. Plover’s Nest at Somerset Lakes, is specifically aimed at buyers in the R1.5 million to R2million price bracket. Named after one of the estate’s resident birds, Plover’s Nest is home to 128 freestanding properties, all with their own private garden. The standard two bedroom units have a double carport, the three bedroom units have a garage and carport, as well as a pergola and patio. All of these units offer spectacular views of the surrounding mountains.
In other metros there is a growing demand for sub-R2m property. In Morningside, Durban, demand is outstripping supply, says Tyson Properties’ Durban brand manager Kim Woods.
“There is a pool of buyers desperate to find homes in this price range,” she says, adding that there are few new developments in Morningside. “We are constantly sourcing land or developers. In a built-up area like Morningside, this is proving difficult.”
In northern Pretoria, Sencon Een’s Newstead in Menlo Park offers double-storey and single-storey ground floor homes and one-bedroom flats priced from around R 1.5 million to R 2.42 million. The new complex is near major access roads, the N1, shopping centres, restaurants, schools and the University of Pretoria campus.
Like most other aspiring property owners, buyers within the R 1.5 million to R 2 million are after convenience and mixed-used spaces, says Stopforth. “They are looking for the latest in technology, connectivity and security.
“Increasingly, mixed-use precincts are offering all these benefits,” he says. “We see many investors and first-time buyers opting for mixed-use developments, where you can live, work and play in the same precinct.”
Amdec’s One on Whiteley at Melrose Arch is drawing attention, despite prices being a little higher – with apartments selling from just below R 2 million. “Located within Melrose Arch, each apartment offers urban living, ideal for working professionals and corporate long-stay tenants, affording investors excellent rental yields and capital growth.”
Modern finishes and a sense of space are important too, says Combrinck. “Our apartment schemes at Sitari offer two-bedroom units with one or two bathrooms, as well as three-bedroom and two-bathroom ground floor apartments with exclusive gardens that feel like homes. All feature high-quality finishes and include Smeg or Miele ovens, and Grohe taps.” The price range is from R 1.2 million to R 2.3 million.
Pam Golding’s The Regency in Menlyn, northern Pretoria, is another good example of a mixed-use development that caters for homeowners in the R 1.5 million to R 2 million price range. Once completed in March 2018, the complex – which offers units priced between R 1.2 million and R 2.8 million – will boast a swimming pool, gym, restaurant, and shuttle services to the Gautrain Station and Menlyn Park Shopping Centre.
Despite his confidence in the sub-R2m property market, Seeff notes that this segment is susceptible to financial strain. “Most buyers in this market are reliant on home loans. Qualification is an issue, he says, referring to consumers being hit by the increasing cost of living and a subdued economic climate. “Getting the cash together for a deposit and transaction costs is also a challenge to this market.”
“There is a pool of buyers desperate to find homes in this price range” Kim Woods, brand manager, Tyson Properties Durban