East london a ‘feast for investors'

Property prices in the South African city of  East London are becoming attractive to property investors, it has been claimed...

This is the view of Lance Gouws, principal of leading local agency Homenet Cornerstone, who notes that sellers in general are now far more realistic than last year and that sales activity is increasing steadily.

Stringent lending policies

A number of factors have converged in favour of buyers, he says. "In July last year, the new Municipal Rates Act kicked in, resulting in higher property taxes for many homeowners.

"Then came increased electricity tariffs, higher inflation and global economic unrest, on top of higher interest rates - all of which prompted homeowners to try to sell.

"At the same time, though, the National Credit Act and much more stringent bank lending policies made it increasingly difficult for potential buyers to access finance, so serious sellers had to rethink their expectations and make their properties more affordable.

"In addition, the incidence of bank foreclosures on properties has increased and the net result is that savvy investors can find opportunities aplenty within East London."

Long-term view

He says those with cash on hand will get good value for their money. However, investors do need to realise that purchasing property is a long-term investment, particularly in the current market. "Those looking to make a quick buck will be sorely disappointed as they will only really see returns in about five years' time."

Freehold properties priced just under R1m are the most popular purchases at present, he says, and loft style apartments have also gained a following. A handful of these units constructed recently have all been snapped up at prices from around R400 000.

Meanwhile a buoyant rental market also bodes well for investors. Accommodation is letting from around R2000 right up to R12 500pm depending on the property and locality.

Source: www.myproperty.co.za