This may come as a surprise to those who believe they have identified the hot activity spots in the South African residential property market, but Secunda, the industrial town 90 km south-east of Johannesburg, in which Sasol’s oil from coal industry is based, is now one of those precincts in which estate agents are experiencing a chronic shortage of stock and seeing steady price rises.
The Rawson Property Group’s franchisees for the area, Natasha and Riaan Herbst, who have owned and managed the franchise here for five years, have in recent years been able, as a result of the strong demand, to increase their turnover by almost 35% per annum – and they expect to do the same this year.
“In practical terms,” said Natasha Herbst, “this means that we are selling six to ten homes per month, but if more stock was available we could probably increase this by a further six homes each month. The only major factor holding back sales at the moment is the current lack of stock.”
The market, says Herbst , is particularly attractive to buy-to-let investors.
“On average, three out of every ten sales we make are to an investor, not an owner-occupier.”
As indicated, the shortages are causing prices to rise at an unprecedented rate. Last year, says Lizelle Botha, the franchise’s top selling agent, she was able to handle considerable stock at prices below R1 million. This year, by contrast, the average price is R1,2 million to R1,3 million, and these prices are likely to rise further.
“Sellers are now keenly aware that the market has swung in their favour and they are holding out for higher values.”
This confidence, adds Botha, may be a little premature because 100% bonds are now a lot harder to get than they were last year, when a very high percentage of the 28 homes that she sold went to buyers with 100% bonds.
Secunda’s residential prices range from R700,000 to R3 million – with an apartment on occasion coming onto the market below R700,000. Above R1 million, she says, the market is increasingly active and well served by one or two long established agencies, but the Rawson Property Group, who are now conducting the most active stock canvassing yet seen in the town and doing various other exercises to raise their profile, expect to handle a higher proportion of the upper level homes this year.
The stock shortages, says Herbst, have also caused rents to rise. Rawson Properties Secunda’s relatively new rental agency already has over 40 homes on their portfolio and over the last year they have seen rents of R5,500 to R8,000 for sectional title units and from R8,000 to R40,000 for freestanding homes.
The oil from the coal industry, says Herbst, drives the whole town, but as it has proven to be very successful and its employees are well paid, the standard of housing is likely to improve and ancillary facilities, such as medical centres, legal services and sports clubs, are not only good but have developed tremendously. There are now half a dozen private schools in the area and one of the country’s largest retail outlets, Secunda Mall, is on track for completion in October 2013.
“However you look at the Secunda property scene,” said Herbst, “it is quite clear that confidence is at a high level and investors are now fully justified in putting their money back into residential property in this area.”
For more information contact Riaan Herbst on 082 854 6654 or Natasha Herbst on 082 857 3941 or email secunda@rawsonproperties.com.
