Investors and first-time buyers eager to acquire an apartment in Cape Town’s Atlantic Seaboard are advised to move fast, as traditional entry-level suburbs have shown huge price increases over the last year.
This two bedroom, two bathroom apartment for sale in Mouille Point is situated in an iconic new building currently under construction in the heart of the Platinum Mile. It is selling for R5.75 million - click here to view.
This is according to Pam Golding Properties Atlantic Seaboard area specialist, Basil Moraitis, who says the average price of a Mouille Point sectional title unit has rocketed by nearly 70% in one year, from an average of R1.8 million in 2014 to just over R3 million in 2015.
“Mouille Point is the Cinderella story of the Atlantic Seaboard, and the phenomenal growth is also pushing up the Sea Point market,” says Moraitis.
He says sectional title units comprised over 90% of Sea Point sales in 2015, totalling 289 by mid-November 2015. This growing interest has underpinned a 23% price increase from 2014, and 162% over the past 10 years.
Green Point sectional title units have increased from an average of R1.4 million in 2014 to just over R2 million in 2015.
“Buyers are attracted by an inherently valuable seafront address, proximity to the CBD, V&A Waterfront, clubs and restaurants, the Green Point urban park, Cape Town Stadium and sports fields,” says Moraitis.
Several trends should underpin the longer-term appeal and performance of such sectional title properties, says Pam Golding Properties analyst Sandra Gordon.
Gordon says these include:
First-time buyers, who opt for sectional title more than freehold, are a growing presence in the housing market. The percentage of first-time buyers applying for mortgages with ooba rose from just 40% from the earliest available data in late-2007, to a high of 54% in late-2014.
2. Live, work, play
Younger buyers opt to live in smaller, more conveniently-located properties, often in metro hubs, to avoid traffic congestion and enjoy city-living amenities.
The shortage of available land in metro areas, as well as and municipal legislation, encourage densification.
Household maintenance costs such as electricity, rates and security are rising steadily. The deterioration in overall affordability is increasing demand for smaller sectional title properties.
5. Buy-to-let demand
While 13% of all property sales through ooba were for buy-to-let investment in late-2007 - ahead of the recession - this slumped to a low of 3.3% in early-2012.
There has been a very marginal increase in buy-to-let purchases in recent years of up to 4.9% of total mortgage applications received by ooba in September 2015. These purchases often favour sectional title properties over freehold properties.
6. Youth bulge
South Africa has a young population which is increasingly relocating to the urban areas. As a result, SA’s metros are becoming larger and younger. Within the next 10 years, this youth bulge will underpin demand for sectional title properties.
Moraitis says developers were accordingly considering the feasibility of any freestanding Green Point or Sea Point house, with a generous zoning allowance, to build two or more units.
“Properties coming onto the market, offering good value can be snapped up in a very short time,” says Moraitis.
Article from Property24