Sectional title units are witnessing a renewed rising trend, accounting for 29.3% of total homes sold by the end of 2020.
This staggering rise follows a falloff in housing sales, following the hard Covid-19 lockdown in the first half of the year, says Pam Golding Properties senior research analyst, Sandra Gordon.
“The slowdown in 2020 was likely due to the lockdown restrictions and the perception that some people were seeking more space and preferred to move into freehold homes (with more space and larger gardens) on the periphery of metros or in zoom towns.”
Low interest rates boom
What is believed to have favoured the subsequent upward trend is the prevailing low interest rates which attracted more first-time sectional title home buyers.
“It is likely also helped by the realisation that lockdowns probably aren’t going to persist forever as a vaccine was developed and [the] rollout [has] began, meaning that a sectional title home remains an attractive option,” says Gordon.
The local sectional title market is increasingly becoming a significant component of real estate sales, rising from 13% of total sales in 2005 to nearly 28% in 2020, according to Pam Golding Properties.
Lock up and go
“I suspect that changes in consumer preferences and lifestyle changes could [also] explain a large part of this trend. We see a rising demand for secure, estate living that offers a ‘lock up and go’ lifestyle,” says Siphamandla Mkhwanazi, FNB economist.
“In many cases, these properties are sectional title units. There is also growing demand for mix-use properties, which offer greater lifestyle options, especially in coastal regions.”
Gauteng continues to lead, accounting for just over half of all sectional title units sold in the country.
“In 2010, 50.8% of all sectional title units sold in the country changed hands in Gauteng, a metric which rose to 52.4% in 2020,” says Andrew Golding, chief executive of the Pam Golding Property group.
Semigration
The Western Cape quickly gained significant sectional title market share between the years 2011 and 2016, effectively placing it second place in South Africa in terms of sales. The province owned 18.2% of the market in 2020, which may in some part be attributed to the ‘semigration’ trend to this region.
“During the height of the initial semigration, the Western Cape experienced a surge in top-end sectional title sales. However, this has subsequently subsided and stabilised to levels registered prior to the semigration trend when those choosing to relocate in terms of region were moving primarily from Gauteng to the Western Cape coastal areas and then to the KwaZulu-Natal North Coast.”
Golding adds that while KwaZulu-Natal holds 14.4% of the market for the same year, “the Eastern Cape has seen its share of the sectional title market increase from 4% for much of the past decade to 5% in recent years.”
For 2021 until currently, the Western Cape holds the highest average price for sectional title units, sold at R1.44 million each. Followed by KwaZulu-Natal at R1.22 million and Gauteng at R1.02 million. The average price in the Eastern Cape remains below R1 million at R938 818 for the year to date.
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