The average sectional title property in South Africa is 41 percent cheaper than the average freehold property.
Lightstone, a provider of comprehensive data, analytics and systems on property, automotive and business assets, said its assessment revealed the average sectional title property was valued at about R850 000 while the average freehold property was valued at R1.2 million.
It added that 82 percent of the almost 850 000 sectional title scheme properties in the country were in the major metropolitan areas.
Paul-Roux de Kock, the analytics director at Lightstone, said the need for densely built residential properties was increasing because almost 60 percent of all value added to the economy occurred in the metropolitan areas, resulting in rapid urbanisation.
De Kock attributed the increased prominence of sectional scheme properties in metros mainly to their relative affordability.
He said the additional security sectional schemes generally offered could also be a major factor but similar, if not better, security could be found in freehold lifestyle estates.
However, De Kock said the relative price difference was low if the property was located in coastal metropoles, such as Durban, Cape Town and Port Elizabeth.
“High sectional title property values in coastal areas are mainly due to the investment potential of those properties as holiday destinations,” he said.
De Kock said there was a strong correlation between the relative price of sectional title to freehold properties and the relative quantity of sectional title properties to freehold properties in different metros.
The average sectional title property in Sandton, for example, was worth about 37 percent of the average value of freehold properties.
The demand for cheaper sectional title properties had increased because freehold properties were more expensive and there were about the same number of sectional title properties as freehold properties in Sandton, he said.
De Kock said a freehold property might provide more privacy, a backyard for the children to play in and good security but could come at a steep price when located close to a dense metropolitan area.
A freehold property in Sandton, for example, would cost about R3.2m while a sectional title property would be R2m less, he said.
De Kock said a freehold property might be a viable option for the average city dweller only if they were willing to hunt a bit further from the city centre where prices were lower.
But he said the additional travel inconvenience and costs should be considered and, if too high, the buyer would need to consider buying a sectional title property closer to work.