The lower to mid-market sectional title sector is expected to remain the busiest throughout 2017, with the highest demand for well-priced units under R1,5m likely to drive most of the activity; however, this sub-sector can also be challenging with buyers unable to secure bond finance.
This is according to Paul French, commercial director for Coastal Property Group, who said that while demand may be high, sales were slower.
“According to FNB, smaller units also showed the best price growth gains last year as these units are often more affordable,” he said. “In most urban areas, the rise in sectional title property is quite evident so it stands to reason that it will now become a busy sector of the market.”
This is especially true in the Cape Town CBD, City Bowl and Atlantic Seaboard where demand is high for sectional title property below the R3m price band.
“If you look at the performance of this sector over the last year, sellers still achieved almost full price with a less than 3% on average below the asking price recorded for the market as a whole,” said Jason Paans, property consultant with Coastal Property Group, with sales in the CBD and City Bowl especially concluded in a relatively short period, averaging at just over a month. “Stock shortages remain a challenge and this will be the case at least for some time. As we have seen over the last two years that new developments sell out very quickly, especially below the R3m to R6m price range.”
One spanner in the works this year will be the higher levies that will be necessary to meet the new maintenance fund requirements that came into effect late last year when the Sectional Title Schemes Management Act regulation were gazetted.
“That said the demand for this property type is such that buyers and tenants are happy to pay higher rates for the convenience and security,” said French. “Of course this new maintenance provision should further add peace of mind for property owners and investors.”