A 1 bedroom beachfront Mouille Point apartment on the market for R3.2 million.
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.
The average price of a Mouille Point sectional title unit has rocketed by nearly 70% in one year (average unit R1,8m in 2014, just over R3m in 2015) says Pam Golding Properties Atlantic Seaboard area specialist Basil Moraitis.
“Mouille Point is the Cinderella story of the Atlantic Seaboard; and that phenomenal growth is also pushing up the Sea Point market.”
Sectional title units comprised over 90% of Sea Point sales in 2015 (289 by mid-November 2015). This growing interest has underpinned a 23% price increase on 2014, and 162% over the past 10 years. Green Point sectional title units have increased from an average R1,4million in 2014 to just over R2million.
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.
Several trends should underpin the longer term appeal and performance of such sectional title properties, says Pam Golding Properties analyst Sandra Gordon:
First-time buyers (who opt for section 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% in late-2007 (earliest available data), to a high of 54% in late-2014;
Live, work, play:
Younger buyers opt to live in smaller, more conveniently-located properties – often in metro hubs – to avoid traffic congestion and to enjoy city living amenities;
The shortage of available land in metro areas, 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;
While 13% of all properties sales (via ooba) were for investment/buy-to-let 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 (4.9% of total mortgage applications received by ooba in September 2015). These purchases often favour sectional title properties over freehold properties; and
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 said 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. It’s advisable to discuss your requirements and leave your contact details with reputable agents. This will help ensure you are aware of what is currently available, plus any developments in the pipeline.”