There is a clear increase in demand for homes in estates. In part, this is the result of greater diversity in the housing offering available in estates. In addition to the key element of security, there is the convenience of trouble-free maintenance and access to amenities shared with other homeowners in the complex rather than the general public. Also appealing in some estates is the possibility of self-sufficiency in water and energy and services like waste removal.
Estates account for a growing percentage of home sales in the over R3 million bracket, increasing from around 20% in early 2010 to 37.9% in the second quarter of 2022. According to Lightstone, just over 17% of all homes sold in South Africa during the first half of 2022 were in estates.
Estates are a small percentage of the market, but demand is definitely growing. We believe this trend is set to continue. In the Western Cape, in particular, the share of the market correlates to the waves of people relocating here from other provinces.
Although SA housing stock remains predominantly freehold, there is a clear shift towards sectional title. This is evident in the composition of new housing stock, with sectional title increasing from 21.5% of all new homes sold in 2018 to 30.5% of new units sold in 2021.
Sectional title homes are popular for the following reasons:
- Security is an increasingly important issue.
- Affordable prices are particularly important to the large number of young adults wanting to gain a foothold on the property ladder.
- Cost and convenience - Maintaining a sectional title property is more affordable and convenient as the costs of services such as painting and gardening are shared with other homeowners.
- Amenities - New developments increasingly offer home owners and tenants access to roof gardens, pools and gyms as part of the live-work-play trend.
According to ooba Home Loans, there has been an increase in approved home loans for new residential developments.
The bond originator reported a 117% increase year on year - up from 6.89% in October 2021 to 14.99% in September 2022. Rhys Dyer, ooba Group chief executive, says that 2022 was a busy year for property developers throughout ooba’s sales territories nationally. Key growth occurred in the Western Cape, followed by KwaZulu-Natal and the greater Pretoria area.
Overall, our statistics show that in all regions except Limpopo and Mpumalanga, a greater number of new developments broke ground in 2022 compared to 2021,” says Dyer.
We believe the demand for lock-up-and-go properties such as these is mainly driven by the shortage of affordable freehold homes in sought-after areas. In addition, buyers are attracted by the reduced costs of buying into a new development as no transfer duty is payable, along with all the advantages of living in a housing development. These include enhanced safety and security and amenities like gyms, swimming pools, restaurants and coffee shops, as well as the benefits of communal living.