Revealed: The trends dominating South Africa’s housing market in 2018

With the year well under way, activity in South Africa’s housing market remains brisk in sought after hubs and locations.

There is generally a solid demand for properties on offer at market-related prices. Buyers continue to show a willingness to embark on first-time acquisitions as well as properties for upgrading or downsizing, or simply relocating, depending on their individual requirements.

Written in collaboration with Pam Golding Properties, we’re taking a look at a few of South Africa’s housing market trends to learn more about the industry.


Trends in South Africa’s housing market:

High appeal of sectional title apartments

Not surprisingly, the demand for convenient, lock-up-and-go, hassle-free sectional title units accessible to the workplace and all amenities continues.

According to Lightstone statistics, at present South Africa has 6.6 million homes worth a total value of R5.1 trillion – 11.8% of which comprises sectional title units, which account for 14.9% of the total value of homes.

Estate agents report an increasing demand for sectional title properties for both lifestyle and economic reasons within the major growth nodes.

Sound capital growth

And in line with this, it is also evident that house price growth in the sectional title housing segment is still outstripping growth in freehold prices.

During the first four months of 2018, freehold price inflation has averaged 3.6% while sectional title was 4.0%. Furthermore, sectional title growth is accelerating, while freehold price growth is slowing.

Whilst the national price growth of small sectional title units (two bedrooms and smaller) has been outperforming large freeholds (four or more bedrooms) for several months now, this trend appears to be coming to an end (according to FNB data).

New developments cater for demand

Developers have been responding to the growing demand for sectional title properties, in what appears to be a longer-term trend, which may see this sector ultimately become the larger of the two residential market segments some years from now.

With a young population who have yet to enter the housing market and with affordability considerations making sectional title properties the preferred entry point for first-time buyers, demand for sectional title properties is likely to remain brisk for the foreseeable future.

Live, work and play trend continues

Another ongoing trend is the continued rise in mixed-use developments as well as the emergence of mixed-use suburbs.

Mixed-use developments, such as Melrose Arch in Johannesburg, feature mainly in key urban growth nodes in metropolitan areas where you can live, work and play.

These developments may incorporate residential, retail, leisure and hospitality amenities – even schools and healthcare facilities – all in a secure and attractive environment. Another example is Steyn City Lifestyle Resort in Gauteng.

The need for a live, work, play lifestyle is growing in part because of major cities’ increased traffic congestion. Instead of spending hours in traffic, people are willing to sacrifice larger plots or gardens to live closer to work opportunities.

Something for everyone on secure estates

For a broad range of home buyers, especially families, secure estate living with a range of added value benefits on hand such as outdoor, sports and leisure activities, is highly appealing.

While secure estates with golf courses remain popular, there is a shift towards estates offering additional amenities and facilities such as cycling and jogging tracks, play areas, equestrian facilities, and even crèches and schools, which make them even more popular due to being more inclusive of the entire family’s needs.

The convenience factor of this kind of lifestyle is not to be underestimated. The demand for

convenient estate living reflects the realisation that it is easier to share facilities without the upkeep and, as many estates go off-grid, this becomes even more enticing.

Interestingly many estates are including more sectional title properties to meet the demand of those no longer wanting larger freehold homes.

Sustainable living a priority

There is also a steady transition to more energy and water efficient homes as South Africa retains its global lead in sustainable building.

The underlying trends in SA’s housing market suggest that the transition to ‘green’ will continue to gather momentum. The growing cost of utilities, coupled with load and water shedding increases the appeal of alternative, greener sources of energy and water but also greater efficiency in homes.

New trends in retirement

The property market is experiencing growing demand for retirement accommodation because people reaching retirement age – whatever that may be – no longer wish to move into an ‘old age home’.

People are living considerably longer, so this is a new market, and as this age category is also leading a far more active life, there is a change in demand for a new type of lifestyle.

Live and learn

At a younger end of the scale, student accommodation within close proximity to universities and tertiary institutions will prove increasingly popular. This includes conversions of houses which are then let out per room, giving investors significantly greater returns compared to a single lease over the property.

There is a severe shortage of student housing in South Africa, a trend which is evident in many metros in prime global cities. In mid-2016 there was an estimated 216 000 bed shortage at our universities.

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