Sectional title purchases on the rise
Category RealADVICE
Over the past 15 years, the percentage of freehold home purchases has declined significantly, while that of sectional title (ST) home purchases - including flats, townhouses and duets - has increased to such an extent that ST living has in fact become the norm in many areas.
According to property data company Lightstone, the percentage of home purchases that are freehold properties has declined steadily from 89% in 2003 to 67% this year, while the ST percentage has almost tripled from 8% in 2003 to 22% this year.
Estate home purchases rose from 3% of the total in 2003 to 11% in 2010 and have remained at that level ever since.
At regional level, the figures show that more than half (53%) of all ST properties purchased in SA are located in Gauteng, while the Western Cape accounts for 19% and KwaZulu-Natal for 16%.
As for the most popular size of ST units being purchased, units of 70sqm or less account for 51% of ST sales in the Western Cape, 36% in Gauteng and 34% in KZN. Two-bedroom units are the most popular choice in all three provinces, but only 19% of units sold in the Western Cape have three bedrooms, compared to 35% in Gauteng and 41% in KZN.
Sectional title prices have been higher in the Western Cape than in other provinces for some years, and this has clearly restricted the affordability and popularity of bigger units.
The Lightstone report also looks at ST properties bought as second homes, with Gauteng buyers accounting for the highest percentage (44%) of these purchases; Western Cape buyers 26% and KZN buyers 17%.
It also appears as though most of these purchases are being made for investment rather than holiday purposes, because around 80% of buyers are choosing units in their own provinces and not in other regions.
Having said that, the areas in Gauteng that have benefited most from the growth in ST purchases since 2003 are Randburg, where sales of ST units have jumped from 39% to 52% of the total over the past five years; Roodepoort (48% to 59%) and Sandton (50% to 61%).
The areas with the strongest ST sales growth in the Western Cape are Stellenbosch (37% to 42%) and Strand (40% to 52%), and those in KZN are Amanzimtoti (71% to 78%) and Durban (47% to 55%).
When it comes to value growth, the average price paid for ST units in Gauteng, KZN, the Eastern Cape and the Western Cape has risen from between R200 000 and R400 000 back in 2003 to between R500 000 and R700 000 now - except in the Western Cape, where the average price is now sitting at about R1,5m.
Author: RealNet
