Young South Africans are defying rising living costs and buying their first homes

BY BONNY FOURIE bronwyn.fourie@inl.co.za

RISING interest rates, fuel prices and the cost of living might be deterring many aspiring home owners from taking the plunge and buying property, but favourable bank lending is said to be in their favour.

Interest rates are also elatively low, despite the hikes.

Comcorp Mortgage Software data for May shows that 71.3% of property buyers were first-timers, a figure that is almost identical to the 71.32% in May 2021. The average age of first-time bond applicants was 37 and the average approved loan-to-value ratio was 90%.

The statistics also show that the average purchase price for first-time buyers was R940 232, with the average deposit being R101 160 in May 2021. The figures were R936 827 and R97 083 respectively. The prime lending rate a year ago was, however, 7% compared to May 2022’s 8.25%.

First-time property buyers continue to dominate activity in the residential market despite recent interest rate hikes, says Samuel Seeff, the chairperson of the Seeff Property Group, explaining that this is being driven by the “favourable mortgage lending climate and low interest rate which, despite the 125bps hikes this year, remains well below the pre-pandemic level”.

He says the levels of buying among people under 35 years old, as reflected in the Deeds Office data, remains high, with the buyers comprising more than a third of activity of the past year in the metros and big cities.

“This includes Johannesburg (33%), Soweto (27%), East Rand (56%), Pretoria (34%), Cape Town (32%), Durban (31%), Gqeberha (30%), and Bloemfontein (35%).”

Home loan approvals, Seeff says, are at “the fastest rates in over a decade”, and deposit requirements are now down to around 6% to 7% as the banks compete fiercely for a slice of the home loans market. He adds that first-time buyers are able to secure 100% bonds plus costs in many instances and that this has been “an enormous benefit”.

Nick Pearson, the chief executive of Tyson Properties, says the positive price bands are at the top and bottom ends of the market, with first-time buyers “propping up the market and creating the perfect supply demand scenario”.

Properties priced at around R1.2 million, which are the ones the average South African buyer can afford, are selling quickly.

“We’ve had good results coming out of Johannesburg this year. It is probably the most stable market when it comes to properties priced between R1.2m and R3m. We are seeing a huge amount of first-time buyers in this market.

“We’ve seen semigration as people move from the suburbs to estates with the emerging buyers of yesteryear becoming repeat buyers who are now purchasing these larger properties.”

DATA shows that the number of first-time property buyers in May 2022 was the same as May 2021. PICTURE: RODNAE PRODUCTIONS/PEXELS