Weekend Argus (Saturday Edition)
Sectional titles enticing younger buyers
YOUNGER buyers are eyeing the southern suburbs, and in particular the sectional title market, say agents.
But, even though prices are still relatively affordable with some spots going for between R1.2 million and R2m, youngsters are still having to get financial help from their parents to get into the market.
During the past decade, because of the astronomical rise in property prices in Cape Town, there has been a progressive decline in the number of first-time buyers in the city. FNB reported an all-time low last year when these buyers accounted for only 7.5% of total home purchases.
One reason for the latest interest in the southern suburbs by younger buyers is that rents are still high and it makes sense to buy if possible, says Barbara Andrew, Lew Geffen Sotheby’s International Realty sectional title specialist from Wynberg to Tokai. She says there have been more inquiries
Pricing is
from local buyers aged between 25 and 35, particularly in the R995 000 to R2m band in the past few months.
“However, to service a bond of R1.1m, a buyer must earn around R35 000 a month, plus they have to take into account the substantial transfer costs.”
So agents are seeing many younger buyers purchasing with the help of their parents.
They look for homes in what they consider good areas and prefer complexes and blocks with excellent security and offstreet parking, Andrew says.
Although there has been a significant decline in market activity across the board during the past 12 months, with investors becoming thin on the ground in many sectors, well- maintained and realistically priced sectional title homes under R1.8m are usually still snapped up.
“Pricing is crucial because not only are investors increasingly cash-strapped and cautious, they are also a lot better informed and on the lookout for bargains in a buyer’s market. Even at entry level, overpriced homes will sit on the market for much longer, often not selling before the price has been adjusted,” says Andrew.
An analysis of Propstats data corroborates these market shifts, says Claude McKirby, southern suburbs co-principal for Lew Geffen Sotheby’s International Realty.
“Last year, there was considerable demand for sectional title homes priced between R2m and R4m, especially in Wynberg and Plumstead. The average time these homes spent on the market was 23 and 57 days respectively. However, between January and July 31 this year the average time has risen to 56 days in Wynberg and 60 days in Plumstead.”
Units priced below R2m in these suburbs are selling faster this year. Buyers are a lot more savvy now and can afford to be picky, McKirby says.
Mike Greeff, chief executive of Greeff Christie’s International Real Estate, says the sectional title market in the southern suburbs has proven to be one of the most steadfast markets in the past six months. “While other markets in the Cape may have shown a slowing in growth because of the market correction, the sectional market has continued to yield growth.”
Although property growth has changed from very bullish in the past few years to a more stable return, Tim Greeff of Greeff Christie’s International Real Estate in the southern suburbs says returns for the asset class are still great and his team are achieving 97% of their marketed prices.