Good News for Sectional Title Schemes: Property Values on the Rise

South Africa’s sectional title sector is showing strong resilience and growth — and that’s welcome news for trustees, owners, and investors alike. Recent data from the FNB House Price Index (HPI) shows that sectional title property values are now outpacing freestanding homes for the first time in the post-pandemic era.

This marks a turning point: sectional title properties grew by 3.8% compared to 3.7% for freestanding homes, and with inflation currently sitting at 3%, owners are finally seeing real increases in their equity.

Why Sectional Title is Leading the Market

Several factors are driving this upward trend:

• Lifestyle and Affordability Buyers are gravitating toward more compact, cost-effective homes. Rising interest rates and slower wage growth have pushed affordability to the forefront, making sectional titles more attractive than larger freestanding homes.

• Shift in Work Patterns With many companies pulling staff back to the office, the pandemic-driven demand for large houses with home offices has faded. Compact, well-located sectional title schemes are now in higher demand.

• Supply Constraints Although new developments are emerging, approvals for flats and townhouses are down 21.2% year-to-date, creating a supply-demand imbalance. This is likely to support sustained price growth, particularly in well-located areas with good amenities and transport access.

  
  

What This Means for Insurance and Governance

For trustees and bodies corporate, rising property values are a positive sign — but they also carry responsibilities. Higher values mean higher replacement costs, and this has direct implications for insurance and governance:

• Accurate Valuations With values rising, schemes must ensure their insurance cover reflects true replacement costs. Underinsurance could leave owners exposed in the event of a major loss.

• 10-Year Maintenance Planning Higher values make proactive maintenance even more important. Trustees who align maintenance plans with realistic insurance valuations will better safeguard owners’ investments.

• Risk Management Demand for sectional titles also means more residents, more vehicles, and more shared infrastructure. Comprehensive insurance policies must cover both structural and liability risks to protect trustees against claims.

• Compliance Obligations CSOS regulations require trustees to act with care and diligence. Ensuring correct insurance levels and up-to-date governance practices is not just best practice — it’s a legal duty.

Looking Ahead

While the South African Reserve Bank’s shift toward a stricter 3% inflation target may bring short-term pressure, the long-term outlook is positive. Lower borrowing costs, improving real wages, and constrained supply are all expected to support continued growth in sectional title values.

For trustees, this is an opportunity to:

• Reassess their scheme’s insurance policies

• Update building replacement valuations

• Strengthen maintenance and governance practices

At MONO.insure Brokers, we specialise in helping sectional title schemes navigate these shifts. By aligning insurance with market realities, trustees can ensure they’re not only compliant but also protecting and enhancing the value of their owners’ investments.