Across the country, the demand for sectional titles is on the rise. The RE/MAX National Housing Report for Q2 2019 reflected that the number of sectional titles sold saw an 18.4% increase in the number of sales when compared to the sales figures of Q1 2019, and an 18% increase when compared to the sales figures of Q2 2018.
“Across most parts of the country, sectional titles offer great investment value. That being said, it is always advisable to check in with a local real estate professional to get a better idea of local market conditions,” recommends Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
Consequently, according to Erna Goodes, Broker/Owner of RE/MAX First in Bloemfontein, the demand for sectional title townhouses has been declining over the last three years thanks to semigration trends. “One of the main reasons for this is the over-supply of townhouses currently on the market. Contributing to this is the ongoing outflow of many young working professionals who would have been the purchasers for these properties but have since relocated to the Western Cape or have emigrated across the globe,” Goodes explains.
According to Lightstone figures for the period July 2018 – June 2019, 30% of the market stock was sectional titles. Considering that 33% of recent buyers were aged between 18-35 (the target demographic for these kinds of properties), it is evident that the supply versus demand gap is closing.
“Overall, the Bloemfontein market can be classified as a purchaser’s market. We regularly experience that the purchasers are in control, making between 5 – 10% reduced offers on properties. However, about 70% of Bloemfontein’s properties are listed above market value. For this reason, prices for full title residential houses in our market have remained quite stable compared on a year-on-year basis,” says Goodes.
As the prices stand currently, Goodes explains that one will struggle to find a freehold title that is in a decent condition marketed for under R1 million. However, she suggests that buyers can find good value-for-money properties in suburbs to the south of the Bloemfontein CBD such as Fichardtpark, Hospitaalpark, Generaal De Wet. But, since the demand for Sectional Title units has dropped, she ultimately advises first-time buyers to consider sectional titles in areas such as Langenhovenpark to get more value for their money.
For investors, Goodes recommends the suburbs surrounding the University of the Free State and the Central University of Technology. “Suburbs such as Universitas, Willows, and Brandwag are quite popular among investors as the prices in these suburbs are quite affordable and provide excellent opportunities for student accommodation, with a very good return on investment,” she explains.
As the market currently stands, Goodes recommends that now is a good time for purchasers to enter into the market. “We are currently experiencing a bit of an upswing in the market based on the volume of sales and the prices purchasers are prepared to offer. With a good real estate advisor by your side to help you look for the correct property, you will find very good value for money if you purchase within the current market,” Goodes concludes.