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First-time buyers, small ST homes boast best price growth

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Sectional title properties with fewer than two bedrooms boasted the strongest price growth in Q3 2017, inflating at 9.3%.

Two-bedroom sectional title properties realised 5.3% price growth, while the largest three-and-more-bedroom category came in at 4.6% average price growth.

This is according to FNB’s household and property sector strategist, John Loos, who explained that the bank’s Sectional Title House Price Index shows a faster growth rate than full-title homes.

“The Sectional Title House Price Index rose by 5.27% year-on-year in Q3 2017 – faster than the 5.1% rate of the previous quarter although still below the multi-year high of 7.6% that was reached in Q3 2015,” he said. “The Full Title House Price Index, by comparison, showed a slower 2.95% year-on-year growth rate in Q3 2017, down from a 7.2% multi-year high rate at the beginning of 2014.”

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A reason for the strong performance of small sectional title properties is due to it being a key target of the “highly-cyclical first-time buyer” trend.

“Apart from low first-time buyer levels in Cape Town, the major regions of SA still have reasonably strong first-time buyer levels, according to the FNB Estate Agent Survey,” said Loos.

In the full-title segment bigger has proven strongest, with homes boasting three bedrooms showing the highest average price growth of 3.7% year-on-year in Q3 2017.

“The relatively expensive four-bedroom and more full-title segment saw a more stagnant average price growth of 2.0% – very similar to the full-title two-bedroom-and-less segment’s 2.1%,” he said, noting that even over the long term, smaller-sized sectional title homes have shown the strongest price inflation. “Since the beginning of 2001…the top performer has been the sectional title less-than-two-bedroom segment, with cumulative average price inflation of 494.57% from Q1 2001 to Q3 2017. This far outstrips the second placed sectional title two-bedroom segment’s 366.5% and the sectional title three-bedroom-and-more segment’s 353.45%.

“The more popular three-bedroom segment’s 326.6% is neck and neck with the four-bedroom-and-more segment’s 329.36%, but outstrips the far more affordable two-bedrooms-and-less segment’s 277.71%.”

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david.steynberg@gmail.com

David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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