R45m for a penthouse? Sectional title sales surge among the rich and the not-so-rich

Buyers are looking for larger apartments offering space to work from home.
  • In 2005 the sectional title component of the residential property market was 13% in SA, but by 2020 it had reached just under 30%.
  • The market is impacted by many first-time home buyers making use of low interest rates.
  • At the other end of the spectrum, the luxury sectional title market is showing a surge in activity, with high-end sales including a R45-million penthouse.

In the last 15 years, the sectional title component of the residential property market has more than doubled – and this trend is accelerating fast as more first-time home buyers take advantage of low interest rates, say industry experts.

Data from Leadhome shows a rapidly growing interest in apartments and townhouses from the second quarter of 2020, suggesting a rise in first-time homeowners entering the market.

But, says Rhys Dyer, CEO of ooba Home Loans, the last year has also seen buyer needs changing dramatically as the work from home trend took hold. Properties that feature separate workspaces, reliable internet connectivity and more space for families spending more time at home are in demand, says Dyer.

In May 2020 sectional titles represented just over a quarter of total sales. By the end of the year, sectional title units accounted for just under 30% of total homes sold.

In 2005, the sectional title component of the residential property market was just 13% in SA.

According to Andrew Schaefer, managing director of property management company Trafalgar, community housing is the fastest-growing residential property sector.

He says there are currently more than 35 000 sectional title developments in SA and more than 8 600 residential estates with home owners’ associations. Of residential building plans passed in the first quarter of this year, 56% were for sectional title flats and townhouses.

Most first-time buyers are in Gauteng

Dr Andrew Golding, chief executive of the Pam Golding Property Group, says Gauteng attracts the largest percentage of first-time buyers and continues to account for just over half of all sectional title units sold in South Africa. The average price per unit is just over R1 million.

The Western Cape is the second largest sectional title market in South Africa terms of sales (18.2%) – despite having the highest average price per unit at just under R1.5 million.

Hot on its heels is KwaZulu-Natal (14.4%) with an average price per unit of R1.22 million.

“Historically, the rise of sectional title living has been driven by a number of factors including cost-effective, convenient, lock-up-and-go living in key hubs close to amenities, coupled with security and affordability,” says Golding.

But it’s not just first-time homeowners taking advantage of sectional title.

Gus van der Spek, founder of Manor Life – a life rights management company, says in the retirement space – ages 65-plus – Covid-19 has accelerated a move to secure retirement living or sectional title options.

For them key concerns are around easy and safe access to health care, safe socialising, and amenities as well the need for security.

At the other end of the spectrum, Ross Levin, managing director for Seeff Atlantic Seaboard and City Bowl in Cape Town, says there has also been a surge in demand for luxury apartments priced above R10 million. He thinks this, too, is driven by the Covid-19 work-from-home trend as well as demand for second homes to escape to, including among European buyers investing again.

At the V&A Waterfront Marina, for example, since mid-2020 there has been about six sales above R20 million, including R45 million for a penthouse.