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GASH market is where future demand lies

Photo: Tiny Heirloom

Affordability, not security, drives the sectional title marketplace. This is according to research undertaken by HomeBid, the low commission estate agency. It further reveals that empty nesters equally consider the importance of security as it does affordability.

“By now we all know that the South African economy is faltering badly and the prognosis for its possible future is for low growth, if any,” says property economist Neville Berkowitz, adviser to HomeTimes. “All South Africans are facing falling employment numbers, interest rate increases, and no rise in real terms in wages and salaries. All this is coupled with load shedding which affects productivity. Consumers are pulling in their horns and watching every cent they spend while business confidence is at a 16-year low.”

The demand for more affordable sectional title homes is going to increase as homebuyers are pushed down the buying pyramid, he says.

According to HomeBid analysis of sectional title transfers in the various deeds offices, the Good Address Small Home (GASH) segment will dominate the R500,000 to R1m marketplace. The emerging first-time homebuyer will also be looking to buy in the R250,000 to R500,000 price segment. Here, sectional title homes are usually found in areas on the outskirts of municipalities where land is cheapest, as well as in or near city centres, in apartment living.

How the four major metros fare on sectional title

The Pietermaritzburg Deeds Office, which is dominated by sales and transfers in the Durban metro, has the highest penetration of sectional title transfers at 38,4% of all homes transferred in the first six months of 2015.

The highest demand for sectional title homes in KwaZulu-Natal was in the R500,000 to R1m price bracket where 48,1% of homes sold and transferred were via sectional title ownership. The R250,000 to R500,000 price bracket was slightly behind at 46.9% sectional title ownership followed by the R1,5m to R2m price bracket at 41%. The R1m to R1,5m marketplace was a little lower at 38,7%, and the R2m+ marketplace saw 31.1% of all homes transferred being sectional title.

The Pretoria Deeds Office, which covers parts of Gauteng, Limpopo and North West is the second most active sectional title marketplace with 37,1% of all residential transfers being for sectional title ownership.

The R500,000 to R1m market dominates, boasting 59% of all transfers being for sectional title ownership. The R1m to R1,5m price bracket has 50.6% sectional title ownership, while the R250,000 to R500,000 price bracket follows at 42,6%. One third of homes from R1,5m upwards are transferred via sectional title.

The Johannesburg Deeds Office covers parts of Gauteng, though its northern areas are registered in the Pretoria Deeds Office. The dominant sectional title marketplace in Johannesburg is in the R500,000 to R1m price band where 48,7% of homes transferred are via sectional title.

The next most dominant price bracket is R250,000 to R500,000, where 39.5% of transfers are via sectional title ownership.  The R1m to R2m marketplace averages 27%.

The Cape Town Deeds Office covers the Western Cape, parts of the Eastern Cape and Northern Cape and has a 25.1% sectional title market penetration.

The R250,000 to R500,000 price bracket has a 39.2% sectional title market penetration followed by the R500,000 to R1m marketplace at 38.4%. The R1m to R2m price bracket has a 27% sectional title presence and the R2m+ market boasts a 22% sectional title market share.

Figures published by Absa in its recent Homeowners Insights confirms the dominating presence of the sectional title marketplace. Some 63% of all the bank’s home loans for residential development units during the past three years were for sectional title. In addition, 64% of respondents to their survey said they would consider buying a townhouse or cluster home.

* Part 2 will look at the current and future supply of sectional title units around the country in various price brackets to determine the future prospects for the sectional title marketplace.

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alison-ht@pixelbaste.com

Alison Goldberg is the former property editor of Business Day (1985) and the Financial Mail (1991-99). In 1995 she won the Sanlam Financial Journalist of the Year Award. She has edited such titles as National Constructor and The Miner in Australia and has freelanced for The Star, The South African Jewish Report and The Jerusalem Post.

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