Almost a third of all homes (31%) sold in the Tshwane metro area are to first-time buyers, according to a new FNB Estate Agent Survey. In Cape Town, only 6.5% of homebuyers were first-timers.
On average, some 17.6% of homes in SA were sold to first-time buyers in the first quarter of 2018. This is higher than the record low of 12% during the financial crisis in 2008/9 – but still far from the 28% reached in 2014.
“First time buyers are typically more sensitive to economic and interest rate cycles than repeat buyers, as on average they are financially weaker and more heavily dependent on credit for their home purchases,” said John Loos, household and property sector strategist at FNB Home Finance.
“In addition, many young aspirant buyers have not yet established a family, meaning that they have greater flexibility in terms of where they live, some remaining in their parents’ home for longer if financial or economic times appear uncertain, or alternatively renting for longer.
First-time buyers represented almost 22% in the Greater Johannesburg area.
Properties in Gauteng are much more affordable for first-time buyers. In the past decade, Tshwane’s house prices fell by 22.5% (after inflation), according to FNB data. Joburg prices fell by 24.1%. But Cape Town property prices continued to increase, with many areas now unaffordable to entry-level buyers.
And right now, the Western Cape’s economy appears under some threat from a severe drought, which could be contributing to greater aspirant home buyer caution, with many perhaps adopting a “wait-and-see approach" to home buying, says Loos.
Some 20% of Ethekwini Metro property buyers were first-timers, compared to only 10.5% in Nelson Mandela Bay. .
The survey also showed that single buyers (as opposed to couples) are much less active in the market. Early in 2014, single home buyers made up an estimated 20% of the market. But by 2018 this had declined to 14%.