Price resistance slows Grahamstown sales

So says Steve Birt, managing principal of the Lew Geffen Sotheby’s International Realty franchise in the Eastern Cape town that is also home to several of the  country’s top schools, who notes: “Despite a rash of new developments aimed at students since 2008, the student buy-to-let market here is still delivering good returns.

“There are a few new units still unsold at the moment, but this is only because the local investor market is saturated, and we are sure they will be swiftly taken up when they receive some outside exposure before the start of the next academic year.”

Family homes for sale, however, are likely to stay on the market much longer, unless the owners urgently adjust their asking prices, he says.

“For many years, people just accepted that Grahamstown house prices were high relative to other areas because of a shortage of non-student related development. Parents who decided to move here because of the excellent schooling available were prepared to pay a bit of a premium, and many academics were happy to rent rather than buy because they expected to have to transfer somewhere else after a year or two anyway.”

Now, though, things are different. “Since the recession of 2009, potential buyers have become increasingly price conscious and extremely resistant to any hint of overpricing. Added to this is the fact that the banks will simply not grant loans to buy properties where they don’t see a certain margin for future value growth,” Birt says

“Consequently, even homes that are well-priced in terms of the Grahamstown market are currently taking five to six months to sell – and even then may only achieve around 85% of their original asking price.”

The best-selling homes in Grahamstown currently, he says, are those priced between R700 000 and R950 000. The student flats that are available range from around R380 000 to R850 000, and monthly rentals currently start at around R2000. House rentals start at around R6000pm for a three-bedroom house.

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