Apartheid-era shanties in Mitchell's Plain attract land speculators

Sellers' markets are nothing new in South Africa, where demand for real estate — and the rise in prices — has been more robust this decade than almost anywhere. But until now the boom was largely confined to middle- and upper-class homes.

Now there are hints that it is spreading to an unlikely venue: townships, the ready-made slums erected by South Africa's former apartheid rulers to separate black and mixed-race citizens from whites.

A recent survey by FNB Bank of South Africa concluded that for every township home put up for sale, there are 7 potential buyers in Johannesburg, 8 in Cape Town and 16 in Durban. Few homes come to market. In most townships the idea of selling one's home is still a novelty because most have traditionally been handed down to family members.

But not for long. In the last 18 months, two of South Africa's biggest real-estate firms have moved into major townships, and it is not hard to see why.

"Take Beacon Hill," said Agenor Lureman, a principal in the Pam Golding Properties office in Mitchell's Plain. "A year ago, you could sell a house there for 80,000 or 90,000 rand. Today you can sell the same house for 140,000 rand." Beacon Hill is in Mitchell's Plain, a sprawling township thrown up 30 years ago south of Cape Town to isolate mixed-race South Africans who had been forcibly removed from their homes in the city.

When Pam Golding Properties, known mostly for selling luxury homes and estates, opened its office here 17 months ago, it hoped to do 2.8 million rand of business each month. This past March, the office sold 4.7 million rand worth of properties, or $700,000. This month it is opening a branch in neighboring Khayelitsha, by far the area's biggest township.

As with most sure things, a cautionary note is in order. Home prices are rising around cities like Cape Town, Durban and Johannesburg, where jobs are more plentiful and governments have invested huge sums in utilities and other basics.

But in rural townships, where jobs and paved roads are nonexistent and the water comes from a community standpipe, rising home prices are a distant dream.

Problems abound even in big-city townships like Soweto and Mitchell's Plain. Demand for new housing is brisk, and banks are sinking serious money into what Americans might call starter-home subdivisions. But in townships, where unemployment can reach into the middle double-digits, poor residents often find they cannot earn nearly enough selling their old homes to make the jump to the next real-estate bracket.

One result is a dire shortage of homes affordable to the working poor.

"The secondary market — the resale market in townships — is dysfunctional," said Kecia Rust, an expert on housing for the FinMark Trust, an organization financed by the British government to help the poor gain access to financial services. That said, Ms. Rust has been besieged by investors looking into the township real-estate market, partly, perhaps, because South Africa's upper-crust market, where prices have risen as much as 35 percent a year since 2000, has begun to tail off.

That boom was fueled by South Africa's dazzling beauty, stable economy and fire-sale prices. Now that those prices are reaching their potential, investors are seeking the next bargain. Some find it at the other end of the income spectrum.

That may not be a bad bet. Spurred by government pressure — and the profit motive — South Africa's four big banks are entering the low-income market in earnest, offering home-loan packages for poor households and financing malls and other retail ventures in long-ignored areas.

The national government has also weighed in. After building thousands of free one- and two-room corrugated-roof homes for the homeless, it has arranged to free up billions in low-cost home loans to the three citizens in four who earn less than about $500 a month.

Finally, big-city townships are no longer the trackless slums of the 1970's. Homes in some neighborhoods are bathroom-size shacks, with endemic crime and roads that turn to mud when it rains. But in many others, gravel paths have become broad avenues, mass-market retailers have taken root and homeowners have built with the enthusiasm of any suburbanites.

In Mitchell's Plain, Rafeeq Khan, 50, a truck dispatcher, beamed as he led potential buyers through his handsome home, bulked up over 10 years with three bedrooms, a new bathroom, an enclosed patio, a garage, blond-birch closets and other amenities. "One small house here is selling for 300,000 — a small house, nothing done to it. And another for 320,000, nothing done to it," he said, citing two homes in the $45,000 range. "We're asking 480,000," or about $72,000.

"He'll get it," said Basil Simon, the Pam Golding agent. "It's a gold mine, Mitchell's Plain, a gold mine. You've got more buyers than stock."

The Tafelsig neighborhood, home to the house at 21 Jonkerhoek St., is by comparison a bit dumpy: stark and grassless, it is distinguished mostly by ill-clad toddlers on plastic tricycles and a shantytown nearby. Gangs with names like $exy Boys rule some streets.

But its tattered state aside, Jonkerhoek is a quiet lane. Crime is low. "You can't leave the property vacant, because you get these naughty guys who move in, take over," Mr. Renquest, the agent for Jonkerhoek, said disapprovingly. "But you'll have more people who want to buy in an area like this, because prices are better."

In fact, up to 96 percent of township homes sell at their asking prices, the survey by FNB Bank concluded, compared with 60 percent on average. And while the average home sold in eight weeks, township houses sold in half the time.

Urban townships have something else in their favor: among the nation's rising black middle class, they are becoming preferred places to live, especially as shopping and other services take root. In short, they are becoming hip.

In 1994, after South Africa shed apartheid rule, "the main goal was to get out of the townships," Ms. Rust said, "and the people who managed to do that found themselves in neighborhoods that functioned quite differently, and socially were difficult. So they moved back. That could be what's happening here."