Nelspruit and White River – in-migration driving rentals
Demand for homes to buy in the Mpumalanga towns of Nelspruit and White River is being fuelled by in-migration from surrounding areas and a considerable shortfall in homes available for rent.
Pam Golding Properties area principal Dirk van Rooyen says a high rental demand is particularly evident in Nelspruit, where former township residents who cannot yet afford to buy homes are looking to rent mainly in the R3,200 to R7,500 per month price bracket.
Just north in White River, a similar movement of residents mainly from the rural area of Kabokweni and other surrounding districts is driving the strong demand for rentals in the lower range. “This mirrors a national trend towards urbanisation and densification of economic hubs – which affords access to employment and amenities,” says Di Dessington, area principal for Pam Golding Properties.
Rental escalations in Mpumalanga have, however, shown negative growth for the past two quarters, posting -1,31% (Q2) and -1,58% (Q3). This is according to the latest Rental Monitor by Tenant Profile Network, which says that not since the first quarter of 2014, when the province posted its highest rental escalation growth of 8.12%, has it recovered, slowing every consecutive quarter since.
Development in Nelspruit continues apace, adding appeal for property acquisitions, with van Rooyen saying the city has two new hospitals in the pipeline, together with other public amenities. “The construction of a new High Court building has been completed, while two of our largest shopping centres, Riverside Mall and I’langa Mall, are doubling in size,” he says. “Coupled with this the industrial and commercial area is expanding dramatically with many new businesses moving in and flourishing.”
Although not experiencing the same high stock shortages in residential properties for purchase as the major metros in South Africa, the price range between R600,000 and R1,5m is in huge demand and short supply.
“About 80% of our buyers are black, the bulk being government employees already in the vicinity or relocating to Nelspruit from other areas,” says van Rooyen. “These purchasers have access to large sums of deposits while the banks are giving 100% loans to certain buyers. Other purchasers are moving here for business purposes, seeking homes priced from R2,5 to R5m.”
The strong demand for homes has seen a flurry of new developments brought to market. Currently Pam Golding Properties in Nelspruit is marketing residential developments in the R400,000 to R2m price bracket, having over the past 18 months sold approximately 60 in the low price range and 22 in the higher segment.
In addition, there are three secure lifestyle estates which are also popular and selling at a steady pace, priced from R1,6m for two bedrooms to R2m for three bedroom, two bathroom homes with high-quality finishes. The growing demand for sectional title apartments in secure complexes as well as security estates sees six new developments planned for next year.
Over and above these, the demand for retirement accommodation is unabated, with three new developments in the marketplace and selling well to buyers in Gauteng and the Cape. Each with frail care centres, some 100 units have been snapped up during the last 18 months.
“Infrastructure in Nelspruit is sound and the city efficiently managed by the local municipality,” says van Rooyen. “For visiting Mozambicans, this remains a very attractive shopping destination – as well as a desirable location to acquire a home. Bringing their children to private schools or for medical facilities they tend to prefer security developments situated close to shopping malls and priced in the region of R800,000 to R1,2m.
“And to cater mainly for the anticipated increased demand for student accommodation near the new University of Mpumalanga, constructed on the site of the former agricultural college, there is talk of the development of high density units to be launched during 2016,” says van Rooyen.
White River is experiencing similar housing trends, albeit on a smaller scale, with most new homeowners being black buyers in the R800,000 to R1,2m price band, says Dessington. “Above R2,5m to approximately R5m, purchasers from all walks of life generally look for a secure, estate lifestyle with access to private schools.
“A positive indicator during the latter part of 2015 has been the slow resurgence in demand for lifestyle homes out of town, as well as holiday homes – sectors of the market which have previously been very quiet.”
Established residential areas however, remain in high demand and achieving good prices while in White River Country Estate – where homes sell from around R2,6m to R7,8m, the demand outstrips supply.
“With a large share of our buyers hailing from Gauteng, the scenic and tranquil environment attracts those relocating for retirement – or business purposes, preferring to reside in White River and commute daily or as required.”