Mining boom to bolster Kathu property market

There has been some speculation that there might be another mining boom in the Northern Cape thanks to the province’s rich supply of minerals such as zinc, nickel, lead, copper and cobalt, which are often used in the manufacturing of new technology.

Kumba Iron Ore, one of the major mining companies in this region, also recently announced that its headline earnings for the first half of the year had increased by 239% to R10.1 billion largely owing to higher iron ore prices.

These recent developments spell good news for the property market in surrounding areas, according to Madeleine de Waal of RE/MAX Kalahari, operating in Kathu.

“Kumba’s recent report causes people to be more positive about the long-term prospects of Kathu and bolsters job security in the area. The job opportunities that will be created owing to the expansion of Kumba and other mines in the district should also attract an influx of people to the area. This will increase the demand for rental houses, which in turn will inflate current rental prices, making it a more appealing option to buy a property rather than to rent,” de Waal says.

She says that roughly 85% of property sales are attributed to the mines in the area, as these buyers are reliant on the mines for work, either directly or as contractors. This means that the local property market is directly affected by changes in this industry.

“House prices climbed well above inflation during the original expansion of the mine around 2010. In 2016, the iron ore price fell dramatically due to the worldwide decline in demand. This meant that a lot of home owners were retrenched or they relocated and had to sell their properties. Owing to very little interest and uncertainty from buyers, house prices came down substantially as home owners were moving and accepted low offers in order to sell. Prices have stabilised since then and currently reflect a more accurate representation of true market value,” says de Waal.

“Currently, properties priced below R1.6 million are selling best in our market. There are a variety of properties in this price segment, ranging from full title two-bedroom and three-bedroom duets priced between R400 000 and R980 000 as well as two-bedroom and three-bedroom townhouses in security complexes priced between R1.050m and R1.5m. We also have plenty of freestanding three-bedroom and four-bedroom homes for sale. Prices can range from R700 000 up to R4.5m on these kinds of homes.”

From a national perspective, regional director and chief executive of RE/MAX of Southern Africa, Adrian Goslett, says that should the Northern Cape’s mining sector continue to grow and expand, investors stand to make sizable returns on investment by buying property in mining towns such as Kathu now before prices climb.

“Should growth in this industry continue, the South African economy could see an uptick in foreign investor confidence and experience greater economic growth as a whole, which could potentially stimulate the property market outside of the northern Cape as well. We are therefore eager to see what becomes of the mining sector in this province,” Goslett concludes.