2009/01/29

Predominantly cash transactions and prices that have stayed within reason are resulting in a far better outlook for the property market in the Karoo.

Prophecies of massive drops in residential property value may apply to the overheated urban market, but country prices have not yet nudged their upper limit.

"Though Karoo properties have shown excellent returns over the last five years, the prices have not gone over the top as they have in Cape Town, the winelands and most coastal areas," says Elaine Hurford of Pam Golding in Prince Albert.

It was inevitable, she says, that factors such as the rising interest rate were going to hurt most where buyers and owners are vulnerable to the increase in finance costs. Many urban buyers are already heavily extended just keeping their foot in the property market, so additional burdens take their toll.

"But, by its nature, the Karoo attracts an entirely different sector of buyers who are not nearly as vulnerable to rates hikes and other negative market factors affecting urban prices. Most are buying with cash for retirement or second homes which are often farms or smallholdings. Many are already there to escape the city's turbulence, give their young children a better lifestyle, or making a midlife career change which enables them to live in and work from a small town. Others have started small businesses to augment a fixed income.

"And if urban crime is not contained and the situation in Zimbabwe remains unstable, more and more people will be coming to the countryside for greater security and peace. We are, in fact, looking at a steady growth scenario here in the Karoo.'

Prince Albert and other Karoo towns have also attracted young families looking for a secure environment for their children, who can walk or cycle to school and friends' homes in safety.

Prices in Prince Albert range from R595k for a traditional cottage in a good area (just sold) to a grand, 15-roomed, fully restored commercial building (a National Monument) at R3,25m excluding VAT. Plots start around R200k in the town and there are several five-hectare smallholdings with full municipal services currently available from R450k.