Sectional title properties are now outpacing free-standing homes in value growth for the first time since the pandemic, marking a subtle but significant shift in SA’s housing market.
The latest FNB house price index shows annual growth holding steady at 3.7% in July, with sectional titles up 3.8% year on year compared with 3.7% for free-standing homes. While the gap is narrow, it reflects a broader change in buyer behaviour.
After high interest rates following the pandemic and persistent real wage stagnation, affordability is taking centre stage. More compact, cost-effective units — from apartments to town houses — are proving more attractive than the sprawling homes that dominated the pandemic’s work-from-home era.
The shift also reflects changing work dynamics. “With more companies calling employees back to the office, the pandemic-era premium on extra space has faded,” said FNB senior economist Siphamandla Mkhwanazi.
Developers appear to be responding, with year-to-date supply of new flats and town houses rising 13.5% to 4,866 units. But this rebound comes off a low base after years of decline, and approvals for new flats and town houses are down 21.2% so far this year.
“This imbalance between demand and supply is likely to keep sectional title prices resilient, particularly in well-located areas with strong amenities and transport links,” said FNB economist Koketso Mano.
“However, rising construction costs, regulatory delays and inconsistent municipal service delivery are keeping developer appetite in check,” she said.
Mkhwanazi said the prevailing market dynamics are “setting the stage for a broader price cycle” supported by easing inflation, steeper interest rate cuts expected from 2027, and modest real wage growth. Until then, sectional titles appear bound to hold their advantage, driven by affordability, scarcity and shifting lifestyles.
“Assuming the SA Reserve Bank succeeds over the next two to three years, historical precedent suggests further rate cuts could begin from 2027, with borrowing costs potentially easing towards the 6% range by 2028,” he said. “Lower borrowing costs, alongside improving real wages and stable inflation, should support housing demand, particularly in the low- to middle-income segments, reinforcing the current upward price cycle.”
Last month, Landsdowne Property CEO Jonathan Kohler said that the recent rate cut and revised transfer duty tables announced in April open new opportunities for first-time and middle-income buyers, as well as investors.
“Buyers earning R22,000 a month can now qualify for homes in the R640,000 price bracket, while those earning R45,000 can secure properties around R1.32m,” he said.
“The scrapping of transfer duty on properties below R1.21m saves up to R24,000, further boosting affordability and unlocking access to areas such as Ekurhuleni, Midrand and Tshwane,” Kohler said.
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