Homes in traditionally affluent areas are no longer driving property growth in South Africa, with sectional title proving to be increasingly popular.
Pam Golding Property Group chief executive Andrew Golding, says the percentage of freehold property transactions had declined nationally from almost 90% of all sales in 2003 to 67% this year, with the percentage of sectional title property transaction increased from 18% of total transactions in 2003 to 22% in 2018.
He explains that while property is still growing well in the Western Cape, it is KwaZulu-Natal and Gauteng where South Africa’s engine room of property growth is now.
“Sectional title property transactions in KwaZulu-Natal accounted for between 16% and 20% of total transactions in 2018, with no discernible trend,” he says and adds, “KwaZulu-Natal’s house price inflation was at 4.27% and Gauteng’s at 2.83%.”
Golding says Amanzimtoti last year replaced Umhlanga as the most popular sectional title offering in KwaZulu-Natal and adds that in 2018 78% of all transactions in Amanzimtoti were sectional title properties compared to 71% in 2003 while the percentage of sectional title properties in Umhlanga dropped to 61% of total sales last year from 78% in 2003.
Golding adds that KwaZulu-Natal is witnessing an influx of investors seeking property to let.
He says that Durban is a great buy-to-let market because acquisition costs were low enough to make yields and gearing attractive while Umhlanga is also popular because both yields and capital appreciation are strong.
This trend is however offset by a decrease in demand for ‘township’ properties according to property economist Professor Francois Viruly, who explains this sector lags behind the rest of the market.
He says that one of the major problems with townships is that this sector is still in the ‘shadows’. It’s not reflected anywhere in the usual weekend newspaper property sections, giving the impression that the South African property market is flooded with properties over R500 000, which is simply not the case.
“The irony is that 60% of property in South Africa is under R500 000 so 50% of the market is not being reflected. So it’s a market but its’s not a transparent one.”