|While strong economic growth and a thriving tourism industry continue to characterise Mpumalanga province's scenic Lowveld area, real estate activity has slowed in the face of a dearth of affordable housing.|
And the shortage of entry level stock is having a knock-on effect on the rest of the market, says Mark Pearce, principal of Realty 1 International Property Group in Nelspruit and White River.
Commenting on local real estate trends, Pearce says that despite a general cooling, the White River market in particular is showing healthy activity. This is spurred on by the imminent construction of a water pipeline from Nelspruit to White River as well as ongoing initiatives between local government and property owners to upgrade the area.
"White River is fast coming into its own for the above reasons and also for its accessibility as a result of the Kruger Mpumalanga International Airport," he said. "Home to a number of fairly upmarket new residential developments and shopping centres, White River property is on average about six percent cheaper than in Nelspruit, which is an additional attraction."
According to Pearce, the hilltop location of the town offers a slightly cooler summer climate as well as a lifestyle that captures the spirit and character of the Lowveld. This is increasingly sought-after by South Africans and local and foreign film-makers whose interest in the area have stepped up in recent months.
But, he says further, rocketing price growth since 2003 and the prospect of a slight interest rate increase have definitely had an effect on the market. Highlighting the fact that around 80 percent of the local population can only afford bonds of between R300 000 and R400 000, Pearce says this effectively puts homeownership out of their reach since the price of an entry level house has risen to an all-time high of approximately R650 000.
Traditionally, the local property market has been cyclically buoyed with existing owners selling to market entrants in order to upgrade to bigger and better homes. This trend has, however, slowed as a result of the current shortage of good stock at the lower end of the market and a tendency by middle and upmarket home owners to over-price their homes in terms of current affordability levels.
"For the market to regain its first and second quarter momentum, it's important to create a feeder market of small, secured homes that are close to the work place and of a high enough quality to allow for value escalation," he says. He adds that aspirant home owners recognise the value of property as an important means of wealth creation, but are stymied in their efforts to invest in bricks and mortar at this point in time as salaries are not keeping pace with price growth.
Upbeat about the future, however, Pearce says there are some affordable housing projects in the pipeline, which will eventually provide the market with homes priced from around R300 000. This should add new impetus to the market.