In the area 1 – Potchefstroom

Student housing market in Potchefstroom shows resilience

In the midst of gloomy reports about property prices falling, a recession looming and investor anxiety growing, the student-housing sector in Potchefstroom is doing well.

“Other parts of the residential market cooled down significantly following the implementation of the National Credit Act and several interest rate hikes in 2007 and 2008, but student housing continues to be vibrant and resilient,” says Melanie Britz, a student housing specialist with Homenet Potchefstroom.

“Whereas house price growth has slowed down or even shown a drop in some places, student housing with the right address continues to be a good investment with an independent and annually renewed source of supply and demand.”

Although 2008 was not a good time for property capital growth, selected student housing complexes proved their worth during this time, she says. “For example, a 50sqm two-bedroom flat in a complex close to the university gates that was sold by the developer for R360 000 at the end of 2006, was resold in 2008 for R510 000.That represents a capital growth of 41% in just two years.”

In another complex that falls within a 1km range of the university, one-bedroom (29sqm) flats that were initially sold for R360 000 were reselling in 2007 and 2008 for R424 000, R450 000 and R485 000, which means an average 25% capital growth for their buyers.

“However, the old real estate adage ‘location, location, location’ is even more crucial here. Complexes close to the gates and within easy walking distance of the university are winning propositions in terms of rental income as well as capital growth.”

Britz advises buyers and investors to make sure that they buy at the right address, and to do their homework. For parents of children who are planning to study at the NorthWest University at some time in the future, it is a value proposition to buy a flat to let out now, and save on high rental costs when their child becomes a student, she says.

Some developers involved in the market are predicting a 15% capital growth rate per annum for complexes situated on Die Bult, and investors trying to decide what to do with their money in these troubled times should seriously consider a medium-term investment in this market, says Britz. “With long rental waiting lists for certain complexes and some excellent value for money investment opportunities in the market, now is the right time to buy.”

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