Thornton, in the southern suburbs of Cape Town, is currently seeing demand for properties – whether to buy or to rent - surpassing supply, says Linette Smith of Jawitz Properties. As a result, property prices have increased and rental yields have firmed.
Thornton is popular with first-time buyers looking for a springboard into the property market as it is well established and situated conveniently between the N1 and N2. People with young families are also attracted by its proximity to good schools such as St George’s Grammar School in Mowbray. Also close by are major shopping centres N1City and Canal Walk, and entertainment facilities like Grand West Casino. Transport is another draw card, as most properties are in walking distance from Thornton train station. Of the approximately 1300 existing properties in the area, 800 are free standing, and the remainder are sectional title or cluster units.
Despite the growing interest, prices are affordable, with gated-cluster houses ranging from R650,000 to R990,000, an improvement compared to just a few years ago.
“House prices in the upper range have grown by about R50,000 on average since the slump of 2008/2009, while prices in the lower range have grown by closer to R70,000,” Smith says. The exception to this trend is properties situated on the two major roads bordering the suburb, namely Viking Road and Vanguard Road, where sellers have to compromise due to position.
“But sellers are realistic, as can be seen by the average difference between asking and selling price, which is currently at around 5%-8%,” Smith says.
“The property boom drove prices in other family-oriented suburbs beyond the reach of some investors, many of whom are turning their attention to more affordable suburbs like Thornton, where they can achieve better yields,” says Francois Venter, Director for Jawitz Properties.
As in many suburbs in the Western Cape, demand for rental properties is strong in Thornton, which is pushing rentals upwards. Three bedroom houses now rent in the R6,500 to R7000 range. On a purchase price of R900,000, a rental of R6000 equates to a gross yield (before rates, taxes and agency commission) of 8%, while a rental of R7000 will produce a gross yield of 9.3%. Two bedroom townhouses rent for approximately R3,800 toR4,500. On a purchase price of R650,000, a rent of R3,800 will produce a gross yield of 7%, while a rental of R4,500 will generate a gross yield of 8,3%. “Investors are increasingly interested in the area because of its price point, growth potential and good yields,” Smith concludes.