Fractional property ownership takes centre stage

Home ownership is a much-anticipated South African milestone, a mark of adulthood, independence and a key to economic security. Today, however, the big South African dream of owning a house in your 20s and 30s has become a challenge. With the intergenerational shrinkage of stable income and a spike in debt-to-income ratio, young people and those with a modest income have been gradually locked out of the real estate market.

Consequently, many young adults are sharing rental homes or boomeranging to parental homes out of economic necessity. Home ownership is increasingly becoming hereditary; something that used to be attained is more likely to be inherited by those who come from money.

EasyEquities has sought to change the game via fractionalised property ownership by creating a company that owns and distributes shares among investors on EasyProperties, thus making property investing affordable for entry-level income earners. In May, a development in the CBD sold out in just seven minutes thanks to EasyProperties' assistance.

FNB has also realised the need to make property ownership accessible and has in turn come out with a new financing product that allows up to eight people to purchase property as a collective. The company is also offering 108% bonds thus providing prospective Cape Town purchasers with the opportunity to cover the full purchase price as well as the additional costs associated with buying a property.

Similarly, developers have cottoned on to the trend and in many cases are implementing micro units (small, self-contained urban apartments for single occupancy) in an effort to make new builds more affordable.

Fractional ownership is not only gaining momentum in the property space. Platforms such as Rally RD, Petale and Luxus give investors the opportunity to buy shares in everything from luxury cars to diamonds and art

The rapid rise in fractional ownership amongst premium assets is set to increase in the Cape Town property market and has the potential to bolster prices, particularly in the entry-level segment of the market.

To find out how you can benefit from a fractional ownership model when selling your property, click the button below to get in touch with an area specialist broker. 

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