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The latest property data shows that the decline in sales volumes in estates during 2016 to 2019 saw an uptick in the post covid years and that Estates are currently offering the greatest growth in value in South Africa’s residential property market!
What is driving sales?
According to Lightstone, this growth is being driven by residential buyers who are opting for Sectional Schemes and Estates in greater numbers, largely because of security and convenient living, but also because there is a greater availability of properties across price bands.
As a result of the Estate market broadening over the past 20 years, there is an increased number of lower-value properties in Estates now on the market. At the end of 2022, lower-value properties made up a significant portion of stock in a break from early convention which saw developments almost exclusively weighted towards larger, expensive properties.
Buyers who could previously only dream about being able to live in an Estate can now afford to buy their own piece of the Estate lifestyle.
By the end of 2022, there were nearly 190,000 Estate properties valued at less than R2m, while 196,000 were worth between R2m-R5m, with almost 35,000 worth more than R5m.
Buyers are also willing to pay more for a home in an estate and all the benefits it offers, with the average price paid for Estate properties being 36% higher than in 2016. The average price paid in Sectional Schemes is also currently 13% higher.
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The stats
Lightstone data shows that sales transactions in Estates increased from 14.8% in 2018 to 16.2% in 2022 while Sectional Schemes transactions rose from 25% in 2018 to 28% in 2022. In comparison, freehold transactions fell from 60% in 2018 to 56% in 2022.
Currently, there are around 430 000 to 460 000 properties in almost 5,000 estates in South Africa. This number makes up only 7% of the country’s more than seven million registered residential properties, but this category accounts for 17% of the market’s value.
If you look at Sectional Schemes and Estates together, they make up less than 20% of South Africa’s registered residential properties, but account for 30% of their value.
Where are the most sales taking place?
The Western Cape and Gauteng account for 70% of all Estate properties in the country.
However, with many people drawn to the coastal lifestyle and the attraction of better functioning municipalities, particularly in the Western Cape, it is no surprise that estates in the Western Cape are growing the fastest. However, with the price point of Estates in the Western Cape around the R5m – R10m bracket and even some above the R10m bracket, it is mostly the more affluent family who can make this move.
Gauteng is seeing the second fastest growth as this province is currently dominating the Estate market in terms of numbers of units sold. KZN comes in third with an increase in sales being noted in the sectional title market.
The value on offer in estates in terms of location, safety and security, facilities such as community centres, swimming pools, schools, golf courses and more remain a huge drawcard for buyers. They recognise the benefits of community living and see not only the great investment on offer but also the possibility of creating a safe and comfortable haven for their families. With more affordable homes now opening up, we expect to see the growth and popularity of estate living increasing.
