Prime cut prods Nelspruit market

With the prime interest rate at 8,5% a rapid effect can be seen on demand for property in Nelspruit.

Juan Botha, owner of the local RealNet franchise, reports that attendance at show houses increased by 60% and internet enquiries by at least 40% in the first week after the announcement. "The lower rate boosted prospective buyers' confidence in property and those who have been saving for deposits are now in a good position to enter the market."

Buyers in the middle-income groups – especially those newly married or planning families - are now particularly active, he says. “Mostly aged between 30 and 40, they have usually saved a deposit and realise they can now make the transition from renting accommodation to building wealth by owning their own homes. Many have been biding their time and the latest interest rate cut was just what they had been waiting for."

Family homes priced at R850 000 to R1,5m are the most popular targets for such buyers and, says Botha, there is a growing shortage of good quality properties in this price range that is unlikely to be much relieved by sellers lowering their prices to catch the new wave of buyers
“One reason is that most sellers bought at the height of the boom and do not have much leeway to negotiate on price because of outstanding bond amounts. Another is that new entrants to the market do not have much spare cash to renovate and are thus willing to pay a premium for homes that are in top condition."

The areas currently most favoured are Sonheuwel Ext 1 and older, established suburbs such as Nelspruit extensions 4, 5, 10, 11 and 14.

Entry-level properties such as two-bedroom flats are selling in Nelspruit from around R500 000 and, he says, the lowest interest rate in many decades is prompting many young people to also get into gear and buy rather than rent.

Townhouses of around 100sqm and with two or three bedrooms are still available at prices of between R800 000 and R900 000. Top properties are marketed at prices of up to R5m and while stronger demand is also evident in this sector, buyers still have a very wide choice among properties on offer and take their time to make offers, Botha says.

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