PROPERTY: City an Investment Paradise
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SUBSTANTIAL capital injection and sound public sector directives on rejuvenating Cape Town has transformed the city into a haven for private residential investment returns with the effects filtering across the broader region, a new report has revealed.
The Trafalgar City Report 2008, now in its seventh edition, has confirmed that Maitland is among the country’s leading residential areas with average property prices escalating 417% in the past two years. In the Cape Town city centre, prices have grown 37% annually amid a strong demand for three bedroom properties and a decline in bachelor and one and two-bedroom homes.
This reflects the rising average household incomes, growing families and changing space requirements among Cape Town’s city dwellers.
Franschhoek has benefited from a 50% increase in average prices and more than three-quarters of the properties available on the market were transferred to new owners within the prior two-year period.
Nationally, data collated from deed office information indicates that highly sought-after areas have experienced dramatic property price hikes despite climbing interest rates. Elsewhere, the interest rate has claimed victims via lower sales prices or a marked decrease in sales activity and transfers.
Some areas show a sales growth in three-bedroom houses and a corresponding drop in smaller home purchases, whereas other areas show an increase in smaller home purchases as entry-level homeowners seek cheaper options in bachelor flats and one-bedroom homes.
The flipside were decreases in the average prices achieved in Woodstock (25% lower), Mowbray (20%), University Estate (18%) and further afield in Hermanus (13%). Although University Estate sustained more sales in 2007 than the previous year, the report commented that the lower average price reflected the growing demand for cheaper one and two-bedroom units.
Stellenbosch also experienced a drop in sales activities across the board.
According to the report, the Cape Town Partnership – an independent public private sector body established to develop, manage and promote the Cape Town central city – has put into place quality urban management systems and guidelines based on the specific local characteristics for areas within the central city. This has prompted investments totalling R18 billion and the upgrading of more than 170 buildings with another R28-30 billion earmarked for the next three to five years.
“Virtually all projects are progressing well and there is overall optimism in the Cape Town city centre, which remains the major economic node in the Cape Town metropolitan area, both in terms of gross geographic product and jobs,” the report says.
Considering broader issues, the report highlighted the attempts by national government to improve housing delivery as well as the role the private sector should be playing in meeting social housing demands.
Nationally 186 000 houses had either been completed or were under construction by the third quarter of the 2007/2008 financial year with 23 438 of these situated within the Western Cape. An Affordable Housing Conference held last year noted South African metropolitan areas demand 55 000 new houses annually against the current 6 700 being built.
Trafalgar managing director Andrew Schaefer says social housing – the provision of rental housing for lower-income earners caught between government-subsidised homes and having the capital to purchase their own accommodation – has not typically been viewed as a private sector realm.
Yet, particularly among developed nations, the private sector has been expected to contribute towards boosting the social housing stock. Black households dominate the South African rental market, followed by the coloured population and annually 105 670 new units are demanded.
The report indicates that mixed income developments such as N2 Gateway and the R30 million Aliwal Gardens Development in Ruyterwacht – the province’s first wholly integrated housing development now accommodating people across the racial and socio-economic spectrum – are making progress on addressing the backlog. “Essentially, South Africa has the systems, legislation and policies in place to deliver on its housing requirements. The way forward demands large-scale implementation; unrelenting follow-through on non delivery; consistent engagement with stakeholders and communities and the strict enforcement of existing legislation,” Schaefer says.
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