The South African property market could reach a point in future where free standing houses close to major metropolitan areas become the exception rather than the rule, according to Absa’s latest Homeowner Insights.
Free standing houses are expected then to become a more expensive luxury.
An international study entitled The Business of Cities, has found that scarcity of land around major metropolitan areas is becoming more and more pronounced as cities expand, urbanisation speeds up and transport infrastructure lags this growth rate.
In South Africa there has been a growth in the urbanised population from 46.6% in 1960 to 64.3% at the end of 2014, according to data published by the World Bank.
According to Absa, South African cities are still far away from the levels of urbanisation and densification experienced in the United Kingdom and Europe.
Yet, while full title properties remain the most attractive property type, findings of the Absa Homeowner Insights has shown that South Africans are steadily embracing higher density living.
Respondents actually showed a higher demand for high density living than the property stock currently available.
The property stock in SA currently consists of 82.7% full title properties, 12% sectional title and 5.3% estate developments. In the last 20 years flats and townhouses have made up 26.6% of newly completed buildings.
In the last three years 63% of all residential development units financed by Absa were sectional title units.
The survey found that increased financial pressure on consumers may lead to an increase in the popularity of apartment living in newer, high density sectional title units where one could live, work and play in one community.
“In generations to come – and if global trends are anything to go by – free standing, full title properties may well become an impractical and outdated luxury for most South Africans,” according to Absa.
“Globally, Millennials are moving to suburban ‘town centers’ where they can live, work, play, eat and shop – not just because it’s the ‘place to be’ but because there they have the luxury of having within walking or biking distance everything essential to meeting their hierarchy of needs.”
Fibrehoods and green living
The research focused on individuals who are decision-makers when it comes to household matters and the sample included tenants of rental properties, established and new home owners, single parents, individuals intending to purchase a home within the next 5 years and investors who buy properties as investments.
Access to a fibre network for high speed internet access in so-called “fibrehoods” and green innovations such as solar power for geysers and pool pumps have made a prominent appearance onto the list of factors that influence respondents during the pre-buying decision making process.
According to the Absa Homeowner Insights, these relatively new requirements outrank pools and staff accommodation, which have been deemed as the least important aspects to consider when buying.
It clearly indicates to Absa a shift in the way consumers are starting to think about where they live.
While energy efficient homes are likely to sell at a premium in future, the effect on the marketability and value of these properties are still to be proven, according to Absa.
Early indicators show that the technology to curb the effects of load shedding has high maintenance costs, and some believe it could make the property more expensive to maintain versus the value that it adds.
Feedback from respondents indicated that most families are still more drawn towards owning suburban, full title properties.
Young independent singles showed the highest relative acceptance for flats and apartments, while young and recently married couples preferred townhouses and cluster developments.
After the unanimous preference for properties to be full title among all groups of respondents, the physical size of the house and kitchen were rated as the second and third most important aspects when considering buying a property.
The size of the garden stood out as a key consideration for families. Single parent families have the largest attraction to sectional title properties, which offers lower maintenance and more affordable running costs.
Young couples showed a stronger preference than any other group to buying pet-friendly homes.