The lock-up-and-go way of life supplied by sectional title dwelling might quickly supersede the demand for full title (or freehold) homes in South Africa. According to Lightstone Property’s current statistics, the amount of switch of freehold homes has declined since 2018, that means that the times of excessive demand for sprawling lawns and white picket fences might quickly be numbered.
In distinction, the amount of transfers of sectional title homes and homes positioned in estates has climbed steadily since 2018 (with a short dip in 2020). While freehold homes nonetheless made up most of the switch quantity in 2021, the recognition of sectional title homes, homes in new developments and homes positioned in estates continues to surge throughout South Africa.
“The term ‘sectional title’ refers to ownership of homes in a complex, estate, or development. You don’t own the complex; you simply own the unit that you reside in.”
Adding to the attraction of these homes are decrease insurance coverage prices, shared upkeep prices and a way of neighborhood. When it involves investing, Lightstone’s newest information additionally revealed that, in comparison with full title homes, sectional title properties have loved a decrease inflation charge since 2010,” feedback Grant Smee, Managing Director for Only Realty Property Group.
Smee does nevertheless warning that whereas the recognition of these homes will proceed to dominate over the following few years, it’s including further value pressures to householders. “Sectional title homes, new developments and properties located in estates are notorious for high levies. This is largely due to security costs and added amenities. Remember, if there is onsite security, a restaurant, squash court or swimming pool on-site – its cost is being covered by the homeowners.”
Excess provide of full title homes: an ongoing difficulty
The development of low House Price Inflation (HPI) in South Africa can’t be denied, as Smee explains: “The excess supply of homes on the market has given rise to a prolonged buyers’ market in some parts of South Africa, while in high demand lifestyle areas, sellers remain in control.”
Smee feedback that a big half of the surplus provide lies in freehold homes and new developments in over-developed, densely populated areas. “Homes in areas where there are security concerns are also moving slowly,” says Smee.
Looking to new developments, Smee says that property builders like Balwin Group have been cashing in on the demand for high-density, lock-up-and-go dwelling. However, in some developments, many new models are standing empty. “This is largely due to the sheer number of units on offer to homebuyers. When deciding whether to invest, buyers will also be weighing up their possible return for units in densely saturated areas.”
Pros and cons: full title vs sectional title
When deliberating on full title or sectional title dwelling, Smee urges potential homebuyers to contemplate a number of components. “These include your life stage, your plans for the next five to ten years and your affordability.”
Full title execs:
- Privacy: “Having extra space and walls around your property gives you a strong sense of privacy.”
- Freedom: “You have the freedom to get pets, paint your walls in the colour of your choice, and undertake internal and external renovations as you please. You don’t need to request permission from anyone, aside from letting your neighbours know, as a courtesy, should you renovate.”
Full title cons:
- Unexpected prices and maintenance: “Any maintenance or repair work will need to be handled and funded by you.”
- Neighbours: “There is very little recourse in situations when neighbours are noisy, disruptive or fail to maintain their properties”.
- Security: “This is of growing concern in South Africa. While many homeowners have put significant security measures in place, these add to the cost of the home and don’t eliminate risks.”
Sectional title execs:
- Structure and maintenance below the physique company: “The body corporate keeps everyone in check and ensures that each property is correctly maintained. Levies are used for maintenance and services that ensure the property always looks good and retains its value.”
- Security: “Sectional title properties are generally equipped with 24-hour security in the form of guards, cameras, and motorized gates. In many cases, anyone entering the premises will need to be signed in.”
- Communal dwelling: “For those who enjoy the idea of having shared amenities such as gyms, cafes, pools etc., sectional title presents an array of options.”
Sectional title cons:
- Less house and freedom: “With the exception of sprawling estates, most sectional title properties are in close proximity to one another.”
- Debt liabilities and particular levies: “Each owner is responsible for special levies should renovations or upgrades be deemed necessary.”
“While the rise of sectional title properties is evident, the choice of the right home is simply based on preference. Be sure to do the math and work with a reputable agent when shopping around,” he concludes.
Grant Smee, Managing Director for Only Realty Property Group.
