Eastern Cape catches the property tsunami

Posted On Wednesday, 08 December 2004 02:00 Published by eProp Commercial Property News
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Eastern Cape is the fastest growing province in SA in terms of house price increases for the third quarter of this year, compared with the corresponding period last year.


Francois VirulyEconomists say that while major metropolitan centres such as Cape Town and Johannesburg have been the engine room for the residential property boom, investors can still find good property opportunities in areas such as Port Elizabeth, East London and parts of KwaZulu-Natal.

Absa senior economist Jacques du Toit says Eastern Cape recorded growth in house prices of 52,6% for the third quarter of this year compared with the yearago period. SA as a whole had growth of 34,5%.

The Eastern Cape growth surge has come on the back of the prospering motor industry and projects such as Coega.

Du Toit says prices have increased sharply in the Port Elizabeth-Uitenhage area, with a 53,7% increase in house prices recorded there for the third quarter compared with the corresponding period last year. The average house price is R564 000.

Uitenhage is known as the Detroit of SA, with car maker Volkswagen SA, as well as Goodyear and Hella, located in the town.

Du Toit says there is strong demand for property and a shortage of stock. Prices have also come off a low base.

"The motor industry is doing well in Eastern Cape with strong local demand. Most motor companies are still exporting," Du Toit says.

He says East London's property market is also doing well and DaimlerChrysler, which is based in the city, is investing in the area.

Property economist Francois Viruly, of Viruly Consulting, says the "locomotives of the property train" tend to be Gauteng and Cape Town.

" They tend to start the game and the Durban market comes in later," says Viruly. Smaller m arkets that experience a property boom after Cape Town and Johannesburg, such as Port Elizabeth for instance, tend to do "a very fast catch-up".

Viruly says there are investment opportunities in the smaller centres in SA.

"Someone asked me the other day whether they should be investing in Sandton or the Atlantic Seaboard. My argument was, neither of them I would focus more on smaller towns in SA."

Viruly says he believes that during the holiday season this year people will be looking for property opportunities along the coast, and Port Elizabeth and East London are relatively well-priced at the moment. "I would suggest there are opportunities there ."

Viruly says that SA has only a finite amount of coast with development potential and that in the next few years there will be a focus on areas between Durban and Plettenberg Bay.

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