Demand for apartments in South Africa is rising rapidly, as many South Africans opt to rent rather than buy. They also prefer apartment-living.

This is according to the Seeff Property Group, which said that more than half of all property sales nationally are still for freehold property.

However, demand for apartments continues to rise rapidly, with buyers prepared to pay ever-increasing prices.

The property group said lifestyle has become a top priority, with people looking for more leisure time and lower maintenance. 

Urbanisation, traffic congestion, and the need to live closer to places of work will likely remain key drivers of the demand for apartments, according to agents from Seeff.

Consequently, apartment sales have boomed in many areas over the last year. 

In Cape Town, around 24% of property stock are sectional title units, many of which are apartments. 

Propstats data shows a booming apartment sales market with over R6.1 billion in apartment sales in Cape Town over the last year.

On the Atlantic Seaboard, apartment sales topped R3.3 billion last year. Only 20% were priced below R2 million, and over one-third of sales were above R5 million. 

Licensee for Seeff Atlantic Seaboard and City Bowl Ross Levin said apartments achieved some of the highest prices paid in Cape Town last year.

These include prices of R50 million and R53 million paid in Eventide in Clifton and R54 million in Helenslee at the Waterfront. 

The prices per square metre reached R187,970 in San Michele in Clifton, R163,636 in Helenslee at the Waterfront, and R160,714 in La Corniche in Clifton.

Levin said the City Bowl/CBD also enjoyed a buoyant year with apartment sales of over R1.2 billion. 

Around 46% of all apartments sold were priced below R2 million, while 30 were sold above R5 million. Several sales topped R10 million as price ceilings continued rising due to the high demand for apartment living.

However, other CBDs such as Johannesburg and Durban have significantly declined since the Covid lockdowns.

Therefore, Cape Town’s CBD remains the exception, despite facing many pandemic-related challenges. 

The CBD enjoyed an uptick in apartment sales over the last year, with 159 units sold at an average price of R2,432,793.

Century City, about a 15-minute drive from the CBD, was highlighted as another bustling area, especially for apartment rentals, according to Helga Clemo, Seeff’s licensee for the area.

Prices depend on what the complex offers, and proximity to Canal Walk. Apartments sell for on average between R2 million to R4 million. The highest rental achieved is R70,000 per month for a furnished apartment in Crystal Towers.

Renting more affordable

Rode’s Report on the SA Property Market for the first quarter of 2024 revealed that many South Africans are better off renting rather than buying.

The report said the decline in national vacancy rates since their Covid peak has supported rental growth.

It said a positive factor for the rental market over the short term has been South Africa’s elevated interest rates, which will continue to sway some potential buyers to rather rent. 

South Africa’s rising interest rates have put many homeowners under pressure, as they face higher bond payments and lower disposable income.

Although interest rates will decline, they will likely not drop again to the ultra-low pandemic levels. 

In addition to high interest rates, prospects for the South African economy over the next few years are not bright, with low growth expected in household incomes.

“Thus, it will remain cheaper to rent than to buy over the short term, and it would make sense − purely from a financial point of view − to rent and religiously save the difference between the rent and what the bond instalments would have been,” the report said.