Real estate agents in East London are reporting continued demand and generally strong price trends in spite of the recent interest rate increases. The under R1.6 million price bracket is proving particularly popular in the region at the moment, and properties in this category are in increasingly short supply.
“We’re seeing a lot of people moving into East London from the surrounding areas lately,” says, East London Rentals. “A lot of them are looking for properties under the R1.6 million mark, which is also a popular price point for first-time buyers. The combination of the two is driving demand in the price bracket higher than usual.”
An Agent from East London Rentals, reports similar findings in her suburb, although at a slightly higher price cap. “We have a much higher supply of houses above R1.8 million, but demand is strongest for properties between R1.2 million and R1.8 million.” The shortage of properties in the under R1.6 to R1.8 million price bracket at least partially to the shortage of residential development taking place in and around East London at the moment.
“There is serious lack of development land available in Beacon Bay , “which means there are very few new properties entering the market, and there aren’t enough existing houses under R1.8 million to satisfy the increasing demand.”
Other suburbs in East London may not suffer the same shortage of available land as Beacon Bay, but they are, nonetheless, seeing the same lack of new development taking place.
“There are potentially some great opportunities for developers, “with high demand from both buyers and renters looking for affordable accommodation. Estates and townhouse complexes are becoming very popular in all sectors of the market, so there is definitely room for a smart developer to get in on the action.”
East London Rentals does point out that the cost of building may be seen as a deterrent, and he has noticed that the average property owner in East London tends to move rather than renovate.
“It’s mostly about the disruption of renovation,” he says, “but cost is a factor as well.”
Conversely, we noticed that Beacon Bay owners frequently renovate rather than move, given the shortage of property in the suburb and the desirable lifestyle it offers.
East London Rentals have noticed that the high property demand, especially under R1.6 to R1.8 million, has had a negative effect on some sellers in the bracket. “A lot of sellers are being tempted to push their listing prices higher – something that can be detrimental to a successful sale. Demand does drive prices up, of course, but you have to be careful to remain realistic. The interest rates don’t appear to be directly affecting demand at present, but there is definite wariness about future increases, and affordability is a priority for many buyers.”
