New data from Pam Golding Property group and analytics group Lightstone shows how much South Africans are paying for sectional title properties right now.
“According to Lightstone data, sectional title units now account for a growing percentage of total sales nationally – rising from an average of 22% of all sales in 2010 to 27.7% of all sales in 2019,” said Dr Andrew Golding, chief executive of the Pam Golding Property group.
“This is despite the large number of new, affordable, predominantly freehold homes which are being developed and sold in cities across South Africa which has been adding steadily to the national stock of freehold homes.”
Golding added that the popularity of sectional title homes has grown over the past decade, not only because they tend to be more cost-effective, but also because they offer heightened security and a more communal way of life.
He said that sectional title properties generally perform well in South Africa due to their popularity with students and first-time home buyers.
“In 2000, 13.5% of all plans completed were for sectional title homes (the total includes homes under 80sqm, namely affordable homes).
“By 2019 this had risen to 54.9% (although this dropped to 46.1% in the first two months of 2020 – the latest data available). During the third quarter of 2019, sectional title as a percentage of total plans completed peaked at 59.7%.”
The below table shows the median price of a sectional title unit in South Africa in 2020 in more detail.
Based on the data, Cape Town has the most expensive sectional titles at a median of R1.35 million. This is followed by Pretoria (R800,000) and Johannesburg (R750,000).
“Interestingly, Pretoria has the largest number of sectional title properties, while East London has the lowest,” said Golding.
The median price of sectional title properties in Cape Town is significantly higher than in other metro markets – presumably because Johannesburg and Pretoria have higher numbers of first-time buyers purchasing sectional title homes relative to Cape Town.
“Cape Town has also registered the strongest growth in market share for sectional title sales over the past decade, from 30.8% of all sales in 2010 to 43.6% in 2020, reflecting an increase of 12.8%.
“Port Elizabeth has also seen a growing percentage of sectional title sales – 38.4% in 2010 rising to 47.5% in 2020, which is an increase of 9.1%. However, in East London, sectional title sales remain largely unchanged at just over 21% of total unit sales.”
Whether the size of sectional title units is likely to increase, as a result of residents being locked down in smaller units, remains to be seen, said Sandra Gordon, Pam Golding Properties senior research analyst.
“The impact of the lockdown on changes in the size of sectional title properties presumably will be driven by the length of the lockdown and whether or not there are further risks anticipated from global pandemics, coupled with affordability factors, given that the economy is likely to remain in the doldrums for some time,” she said.
“There is likely to always be a demand for affordable units, particularly in Johannesburg and to an extent Pretoria, as young people tend to flock to Gauteng looking for employment and first-time buyers typically show a preference for sectional title properties.
“The age profile of South Africa’s population, coupled with the lock-up-and-go lifestyle and rising maintenance and utility costs all favour sectional title properties.”