ASP Director predicts higher sectional title sales-at lower, even more competitive, costs

In times of lower average prices in the sectional title residential property market, sales volumes traditionally soared upwards. Conversely, when average prices rose almost always  sales volumes declined. In recent times this pattern was apparent year after year. In 2016, for example, in Cape  Town 4620 sectional title sales were signed at an average price of R1 572 000 and, in 2018,  3573 sales were put through at an average price of R1 795 000. However, in 2020 this correlation between  lower prices and  higher sales suddenly no longer seemed valid: despite the average price then being only R1 420 000, only 3008 ST sales were made.

Analysing these and other trends in the Cape Town ST market, Rowan Alexander, Director of the Cape Town estate agency Alexander Swart Properties, says that he is confident that  in 2021 and 2022  sectional title sales volumes will increase dramatically AND average prices will be kept at record low levels.

This, he says, will come about because developers have assimilated and understood the current market position and have adapted to it. The lower prices, he said, will be the result of making the apartments still smaller -the only way to keep prices low. Many property trend watchers had, he said, begun to assume that apartment sizes could not be smaller-but the products now being offered clearly show that this is not the case: average two and one bedroom apartments have dropped in size from 67m2 to 55, 49, and even 39m or 35 m2 and today it is possible to find bachelor apartments as small as 27, 24 or even 22m2 .

"Developers," says Alexander, " have pulled out all the tops to satisfy the call for truly affordable apartments-and some have been amazingly inventive in doing so; many of these smaller apartments are really attractive. It seems, too, that this trend will continue well into the next two or more years."

The call for smaller units, he added, had been further pushed  by the increasing densification and rise in land prices in  the satellite towns and suburbs of Cape Town, such as  Brackenfell and Durbanville. These, he says,  are ideal for this type of low cost apartment because they  usually provide near at hand a wide variety of amenities, public transport, schools,  retail centres, bistros, libraries, recreational and sports opportunities, making it possible for the tenants  to manage without a car or only one car.

"As a corollary to this, it should be said that these low-cost apartments close to or part of thriving decentralised satellite towns are very good buy-to-let opportunities-but beware of similar projects developed in more outlying areas where they are not so close to amenities. Tenants in these will struggle to achieve a satisfactory lifestyle."

Alexander says too that although his comments relate primarily to Cape Town, the same trends are observable in all the major centres of South Africa.

For further information, please contact Rowan Alexander by email : rowan@aspg.co.za or by cell-phone on 082 581 3116.