Housing market in affordably priced Port Elizabeth offers potential for sound capital growth
With the residential property market in Nelson Mandela Bay reflecting house price growth of 5.3%, outperforming the national average of 4.3% (Source: Pam Golding Properties residential price index January to November 2018), savvy investors and younger buyers who are snapping up homes in the sub-R1 million end of the market in this municipality stand to enjoy sound capital growth in this high demand, very active sector.
So says Justin Kreusch, Pam Golding Properties joint area principal in Port Elizabeth, who says well-priced properties, including good family homes in well-established areas and properties up to the R3 million mark, continue to experience ongoing activity. He says younger buyers are also entering the market, mainly seeking lower maintenance, lock-up-and go homes.
Comments Kreusch: “Right now there are good deals for those prepared to do their homework and extensive research. We believe many buyers are missing out on these opportunities, waiting for the election, following which we anticipate an uptick in demand which will in turn push up house prices.
“For example, the western suburbs, such as Hunters Retreat, where we recently opened an office, have seen exceptional activity. With the majority of sales in the below R1 million price bracket, these remain good value areas, while the proximity to Bay West and easy access to the N2 means residents enjoy convenient location close to all amenities.
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Still very affordable
“As it’s still coming off a low base house price-wise, Port Elizabeth remains a very affordable city in which to live. If one compares prices to those in Cape Town, Durban and East London, we are affordably below all three. We also enjoy a fair climate, excellent schools and beaches and an attractive lifestyle, with little in the way of congestion and traffic.”
Positively for the area, there has been continued investment in the Coega Industrial Zone. Motor vehicle manufacturer, BAIC is in the process of completing a R20 billion investment in a production plant, while there has also been some major development along the William Moffat Expressway, where most of the major vehicle dealerships have moved. The Fairview area has also seen some major commercial and industrial development and this growth in the area has resulted in infrastructure investment in the form of upgrading of roads and telecoms. In addition, the western suburbs have also experienced recent infrastructure upgrades.
New residential development
Adds Kreusch: “In terms of residential development, the below R1.5 million price band has seen constant supply over the last five years to meet the growing demand. There is also a high demand for student accommodation and retirement villages. High rise developments have for the time being been largely restricted to Summerstrand. We are currently in ongoing discussions with a developer regarding a large Summerstrand development which, if it comes to fruition will in terms of concept and scale be unlike any other development seen in Port Elizabeth.”
Time in the market
Kreusch says unfortunately, many buyers miss opportunities presented because they want to get the ‘timing right’ for investment. “But of far more importance is getting your foot in the market and then holding on for as long as reasonably possible to ensure a good return. While timing the market may have been prevalent in the 2004-2007 market conditions, we are unlikely to see that kind of year-on-year growth again. Consequently, we believe that ‘time in the market’ is much more important.
“In an ever-changing world, the modern buyer is more open to the idea of moving more regularly, but I believe that you need at least three to five years to recover your costs of purchasing as well as selling. Holding onto your property for longer will in most cases yield some kind of capital growth – as property as an investment is and always will achieve greater returns over the longer term.”
Offering further advice, Kreusch says: “For buyers, if you see the right opportunity, take it. Ensure you do your due diligence on area trends and prices and work through an agent who knows the areas in which you are looking. For sellers, the market is still price sensitive, so position your property correctly in order to compete with existing properties on the market. While previous sales data is important, we are finding that buyers are more interested in what other comparable properties are available, rather than what has sold.”
