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Why more South Africans are buying sectional title property

05 Aug 2019

Today’s fast-paced and busy lifestyle dictates that for many people, convenience is a key factor critical in decision making when it comes to buying or renting a home.

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Coupled with a trend towards smaller living spaces which enjoy reduced monthly utilities and maintenance costs, or which are better suited to a change in lifestyle, this has resulted in an exponentially increasing demand for sectional title units in apartment complexes in easily accessible locations, says Dr Andrew Golding, chief executive of the Pam Golding Property group.

“With South Africa’s young demographic profile, it is hardly surprising that there is a growing demand for sectional title living, not only from first-time and young buyers opting for apartment living, but from homeowners across all ages who are seeking smaller homes in more convenient locations,” says Dr Golding.

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“This is borne out by the fact that in Cape Town’s city centre, the average size of apartments sold decreased from approximately 82sqm in 2013 to 77.6sqm in 2018 (Source: Cape Town Central Improvement District). While sacrificing space, and apart from the benefits of lower operating and maintenance costs and good security, a smaller apartment in a convenient location such as this enables a reduction in the daily commute to the workplace as well as on foot access to a range of facilities such as restaurants, coffee shops, gyms and shopping, among others. Indeed, some new developments in key, centrally positioned hubs in various regions around the country offer a host of such facilities on site, further enhancing the ‘live, work, play’ appeal of the location.”

“In 2010, only 13.5% of all new residential buildings completed in South Africa were sectional title properties, which, according to Statistics SA, by Q1 of 2019, had risen to 57.7%. In addition, new and repeat sectional title sales increased from 21.2% of total residential sales in the country in 2010 to close to 28% in late 2018,” says Sandra Gordon, senior research analyst for Pam Golding Properties.

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“The trend is pronounced in Gauteng province, which dominates the sectional title market, accounting for just over half of all apartments sold each year. We know that half of all young South Africans buy their first home in Gauteng - hence the demand for sectional title units. Here, according to Lightstone, sectional title sales have risen from an average of 27.4% of total unit sales in 2010 to 33.9% in 2018.”

Gordon says the shift developers are making towards building new sectional title homes is highlighted by the fact that 60.1% of all new homes sold in Johannesburg last year were sectional title properties, while 45.4% of all sales - both new and repeat - were sectional title units.

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“Affordability is a further factor favouring sectional title. For example, of the 12 603 sectional title properties sold in Johannesburg last year, 45% were priced under R800 000, while a further 40.1% were priced between R800 000 and R1.5 million, and only 191 units (1.5% of the total), were sold for more than R3 million,” she says.

In Tshwane Municipality, 33.3% of all new homes sold in 2018 were sectional title, with a similar proportion of 35.4% of all sales - both new and repeat - comprised sectional title. Of the 7 042 sectional title properties sold in Tshwane last year, 50.6% were priced under R800 000, while a further 39.7% were priced between R800 000 and R1.5 million, and just 21, or 0.3%, of all sectional title units sold were sold for in excess of R3 million.

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Interestingly, Gordon adds that eThekwini Municipality in KwaZulu-Natal is also experiencing the shift towards sectional title - with these sales as a percentage of total unit sales rising from 27.8% in 2010 to 34.7% last year. In a similar metric to Johannesburg, 61.8% of all new homes sold were sectional title properties, and 41.7% of all sales - both new and repeat, were sectional title units. Of the 4 755 sectional title properties sold in eThekwini last year, 49.9% were priced under R800 000, with a further 30.8% priced between R800 000 and R1.5 million. A total of 169 units (3.6%) were sold for more than R3 million.

In the Western Cape, sectional title as a percentage of total sales rose from an average of 14.4% in 2010 to 19.4% in 2018. In Cape Town, sectional title comprised 28.4% of all new homes sold in 2018, and 25.3% of all sales, both new and repeat. Of the 6 520 sectional title properties sold in Cape Town last year, 34.5% were priced between R800 000 and R1.5 million, while a further 31.9% were priced under R800 000, and 543 units or 8.3% sold for more than R3 million.

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In the Eastern Cape, sectional title as a percentage of total sales increased from an average of 15.2% in 2010 to 19.7% in 2018. To date in 2019, 24% of all sales in East London have been sectional title and 47.9% of all sales in Port Elizabeth - up from 20.9% and 41.4% respectively in 2018.

“In line with the trend towards sectional title properties, mixed-use developments - such as Menlyn Maine in Pretoria, and others in Sandton, Cape Town central and Umhlanga - which facilitate an appealing and secure, lock-up and go lifestyle are increasing in popularity. Apart from having appeal for the younger generation, these include professionals who travel frequently and retirees who travel overseas to visit family,” says Gordon.

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