August 17 2023
A guest piece by the Seeff Property Group
There has been a notable shift in the urban property markets in Gauteng with sectional title property currently being a sweet spot for buyers. This is largely due to affordability, but also security according to the Seeff Property Group.
Aside from the lower price points, sectional title property offers key benefits including reduced maintenance, generally better security and often shared amenities such as a swimming pool, gardens and play areas for children and so on. New developments may also offer a gymnasium.
According to Deeds Office data sectional title property transactions comprised some 31% of all transfers over the last year with more than half of those (52%) in Gauteng. The highest volumes were prevalent in the urban areas around Johannesburg, Randburg, Sandton, Midrand and Centurion.
In the greater Randburg area for example, sectional title sales account for 51% of all transactions over the last year despite only making up about 44% of all property stock, clearly demonstrating the shift.
Detmar Nuttal, sales manager for Seeff Randburg says the area is renowned for its affordability and choice of security complexes. These are often sought by first-time buyers, but also young families and those looking to downscale. Security and affordability are two key drivers of the market.
Sectional title prices range from around R650,000 on average in areas such as Weltevredenpark, Wilgeheuwel and Allens Nek, but there are many options at different price points.
Apartments and townhouses are also popular rental investments. It is usually not too difficult to find a tenant to fill a unit, but obviously any potential investor must first check whether there is a need for more stock in the particular area.
In the Sandton, some 60% of all sales concluded were sectional titles although it only makes up about 55% of all property stock. It has been one of the fastest growing sectors of the market in terms of new developments.
The highest volume of sectional title property tends to be in areas such as Bryanston, Morningside, Lonehill, Sunninghill, Paulshof, Douglasdale and Sandown, but there are also many other areas including Buccleuch and Edenberg.
A key benefit of sectional title is that it offers more accessible pricing for those looking to live in a Sandton suburb, says Charles Vining, MD for Seeff Sandton. While a very popular property choice, there has not been any notable spike in prices which is largely in keeping with the generally weak price growth experienced over the last few years. Buyers can therefore find really good value in sectional titles, he adds.
That said, there is growing demand for luxury sectional title properties including penthouses which are selling for well into the upper millions, around R4m to R6m on average, with luxury units priced upwards of this.
Mr Vining says Midrand is another very popular area for sectional title property buyers with some 66% of all sales transactions worth about R2.2bn concluded over the last year although it only comprises 35% of all property stock.
The affordability is well illustrated considering that more than half of all sales were between R400,000 and R1.5m, with average prices ranging from around R650,000 to R1.5m.
Other popular sectional title areas include Bedfordview (about 74% of all property stock) and Edenvale (35% of all stock).
Tiaan Pretorius, manager for Seeff Centurion says here too, sectional title sales dominate, making up about 56% of all sales transactions over the last year while comprising just under half (46%) of all property stock. He expects the trend to continue.
Given how big the sectional title market is, he says some challenges for the sector include how bodies corporate will adapt to alternative power needs from residents, and to what extent complexes will look to become self-sufficient in this regard.
Almost all areas in Centurion are popular when it comes to sectional title properties. About half of all sales tend to take place in the R800,000 to R1.5m price band. The highest prices achieved over the last year include R3.7m and R3.5m for units at The Paddocks in Southdowns, R3 million at The Lofts (Southdowns), R2.8m at The Gables (Southdowns), R2.75m in Ascend to Midstream, and R2.7m in Squirrels Leap (Heritage Hill).
While Pretoria East is still dominated by freehold property sales, Gerhard van der Linde, MD for Seeff Pretoria East says there is a continued shift towards sectional title property for reasons such as affordability and convenience. The highest demand is around the R2m price range.
He says newcomers see sectional title as a first stepping stone into the property market due to the affordable pricing. The concept of lock up and go is also attractive for this market, and costs of maintenance and insurance of the buildings are shared between the owners who form part of the body corporate.
There are however challenges. Rising building costs and challenges around obtaining approval for new schemes have become major obstacles in the way of the establishment of new schemes. He adds further that location is of high importance. The student market and young professionals favour sectional title schemes that are close to the university and places of work where new business nodes have been established in recent years.
alistair@propertyflash.co.za