South Africa’s first-time homebuyers have had a tough time entering the property market in recent years thanks to high interest rates and living costs, but this has not stopped them from staying the course.
In fact, despite the challenges, they are managing to put down higher deposits than they were a year ago; the average price they are paying for their first home is, therefore, also higher.
Data from ooba Home Loans shows that, while the average age of the first-time buyer has gone up slightly – and the volume of these buyers has dropped – those who have been able to enter the market have been saving up for a decent deposit.
In the last three months of 2023 (Q4:23), the average deposit was 10.9 percent of the property purchase price. This is a 2.1 percent higher than the 8.8 percent average deposit size in Q4:22.
ooba Group chief executive Rhys Dyer says the average property price for first-time buyers is now R1.118m compared to R1.113 the year before.
“This tells us that first-time homebuyers – now at an average age of 36, up from age 35 in Q4:22 – may be taking longer to enter the property market because they are in fact taking some extra time to save up for a decent deposit.”
The financial challenges many aspiring homeowners are facing is why fewer of them have been able to take their first steps on the property ladder over the past year. First-time homebuyers accounted for 48 percent of ooba Home Loans’ application volumes in both Q3:23 and Q4:23, down from 49 percent in Q4:22.
“This remains considerably lower than the peak of 56 percent recorded in May 2020 when interest rates tumbled to a historical low of seven percent,” Dyer adds.
The data also reveals that:
– The average age of all home buyers is 39
– The average purchase price of all buyers is R1.411m, compared to R1.422 a year ago
– South Africans’ nominal salaries are growing at a faster rate than property prices
– Average home loan approval rates have only dropped by two percent
– There robust demand for luxury homes priced from R3m – these now account for more than one-third of properties purchased
– Home loan application volumes for buy-to-let properties are increasing
Meanwhile, the BetterBond Property Brief for January states that the average home loan value in the Western Cape in 2023 is 24 percent higher than the national average.
– Western Cape: R1.493m
– Greater Pretoria: R1.326m
– Johannesburg North West: R1.292m
– KwaZulu-Natal: R1.198m
– Mpumalanga: R1.185m
– Johannesburg South East: R1.068m
– Free State and Northern Cape: R971,000
– Eastern Cape: R904,000
– North West: R868,000
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