The residential property market in Newcastle, the bustling northern KwaZulu-Natal town halfway between Durban and Johannesburg which is ‘alive and well’ – and this is due, mainly, to very strong demand at the lower end of the price scale.
This was said recently by Johan Anderson, who since December 2011 has been the Rawson Property Group’s Newcastle franchisee.
“About 70% of the potential buyers who come to us,” said Anderson, “are looking for homes in the R500,000 to R850,000 category and it has to be admitted that there are not many in the R500,000 to R600,000 bracket. Of the four to five houses that we sell each month, the vast majority are priced below R850,000.”
The buyers, he added, come from all walks of life and there is a strong Chinese community in Newcastle today, mostly involved in the retail trade and with clothing manufacture.
Buyers in the Newcastle market, said Anderson, are drawn to the area by the many coal mines and by such major industrial organisations as Arcelor Mittal and Karbochem, Eskom and Spoornet.
“Because development is on-going here, we always have two or three hundred contractors living in the town and they boost the sales and the rental market. Rentals, for example, even on fairly ordinary two or three bedroom homes, are pitched anywhere from R5,000 to R7,000 per month – and are continuing to rise by 5% per year.”
The on-going demand for houses in Newcastle, said Anderson, has ensured that prices have remained stable and recently have begun to swing up by 5 to 10% year-on-year. Only at R1,5 million and above have sellers had to accept that market values have dropped. Even here, he said, it is possible for an agency, such as his, to sell at least one house per month.
Asked what negative factors affect the local Newcastle market, Anderson said that, as is often the case at the lower end of the price scale, there is, as already indicated, no lack of willing buyers. However only half of the applicants actually qualify for bonds.
“This is a great pity,” he said, “because jobs here are usually secure and buyers can be relied on to pay. However, tarnished credit records are generally the cause of the applications being rejected.”
In the year ahead, said Anderson, his agency will probably double the volume of its sales – not only because he has launched a big advertising drive and expects to increase the number of houses on his stock list but also because the town is still attracting big investment from a wide range of investors and businesses. This, he said, makes almost any home bought here a good capital appreciation prospect. This is appreciated by a growing band of buy-to-let investors who, using the Rawson Property Group’s referral network, are increasingly coming to him.
