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Long-term view on real estate performance

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If you bought a small sectional title unit in 2001 and still own it, you are laughing all the way to the bank.

If you bought a small sectional title unit in 2001 and still own it, you are laughing all the way to the bank.

Using the first quarter of 2001 as a benchmark, FNB has taken a long-term view of property performance to the end of the second quarter of this year.

This period has spanned the country’s biggest housing boom on record, the global financial crisis of 2008, and the more “normal” period that followed.

John Loos, FNB’s household and property sector strategist, says over the past 16.5 years, smaller sectional title units have increased in value by an impressive 479%.

These smaller units are defined as having fewer than two bedrooms. Next comes “sectional title two bedrooms segment”, which has increased by 366%, followed by the “three bedrooms and more” at 363%.

These figures are all ahead of the rises in value of stand-alone homes: “two bedrooms and less” in the full-title segment improved by 260%; “three bedrooms” by 324% and “four bedrooms” by 315%. Better overall growth for sectional title units has been maintained in the second quarter of this year, according to the FNB Sectional Title House Price Index.

Loos says the index rose by 5.35% year-on-year in the second quarter of 2017, compared to a slower 3.4% year-on-year growth rate for full-title properties.

“Within the sectional title segment, smaller was still better in the second quarter of this year, growing at 11.5%, followed by the ‘two bedrooms segment’ at 6%, and the ‘three bedrooms and more’ segment at 3.6%.”


Independent HOME

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