"The priority must shift away from disposable consumer goods and expensive cars to building up assets, the most important of which is owning a home."
Gauteng first-time buyers may be having a better time than those in other parts of the country, but their numbers are still down on previous years, reflecting a general South African picture.
Lightstone’s statistics showed 27 320 Gauteng buyers entered the market last year, higher than the Western Cape and Cape Town. However, in 2016 and 2015 this figure was 44 182 and 48 360 respectively.
In South Africa home ownership is out of reach for many middle-income earners. There is also “no doubt” that as the cost of living continues to escalate, more will find themselves with less disposable income, says Herschel Jawitz, chief executive of Jawitz Properties.
“Add to this the costs of private schooling and basic level medical aid and the dream of home ownership may be just that – a dream.”
Furthermore, few first-time buyers in this income bracket – which is a monthly household income of R15 000 to R45 000 – are able to buy in the areas they would like to live in for their first home, he says. But that does not mean they should not buy.
“Owning a home is not only about the security of a roof over your family. Equally important, it also is about building up an asset that allows you to sell your home, and take the equity you have built to buy a better home in a better area.” Aspirant buyers without the finances to buy a home should look at their priorities.
“As the middle-class continues to grow and mature in terms of spending their hard-earned income, the priority must shift away from disposable consumer goods and expensive cars to building up assets, the most important of which is owning a home.”
Part of this is spending as little as possible on rent to save for a deposit and transfer duties to buy a home, Jawitz says. For people with children, the struggle is even tougher.
“Many South Africans make tremendous sacrifices for their children to enjoy a better future, especially when it comes to giving their children a better education, whether it be at private schools or getting a university degree. For a middle-income family, it may be really difficult to afford this and own a home.”
One way they may be able to afford both is to move further out of the metro areas, which are more expensive. Of course, this depends on them either having their own vehicle, or access to good public transport. There is, however, some good news for aspirant buyers, says Rhys Dyer, chief executive of bond originator ooba.
“It appears as if consumers are managing their debt well, with consumer affordability measures still improving off the highs of 2008 and 2009. As a result there is strong competition among banks to lend to home buyers. We expect a buoyant home loan lending environment in 2018.” Furthermore, as the economy improves, it is believed many aspirant homeowners will enter the market, says Sandra Gordon, senior research analyst at Pam Golding Properties.
“Developers are responding with small/micro apartments which are well-located in CBDs and other growth nodes, not only for young professionals to rent but also ultimately to buy.”