More than 36000 aspiring homeowners have made their dream come true this year by taking their first step onto the property ladder.
And most of these buyers are younger than 36. Lightstone Property Data reveals that, so far this year, a total of 36434 people in South Africa have taken ownership of their first properties – a figure that is already hovering around 50% of the total new property purchases recorded in 2019 (73750) and last year (71409).
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The figure does not include properties “sold” to first-time buyers but still awaiting final transfer through the Deeds Office. First-home buyers remain a formidable driver of the residential property market’s remarkable recovery, with BetterBond reporting that the average purchase price of a first-time home has been hovering around R1 million for several months.
Chief executive Carl Coetzee says, after months of steady growth, the average purchase price paid by first-home buyers hit the R1m mark in October. “Considering that this was shortly after the easing of lockdown restrictions, the sustained upward price trajectory suggests that lower interest rates have certainly been a motivating factor.”
Lightstone’s figures show that most first-time homeowners this year are under 36, accounting for 21004 of these purchases. They are followed by buyers aged 36 to 40 (10899), 50 to 64 (3081), and 65+ (1236). The ages of 214 buyers are unknown. The data also reveals that the vast majority of new homeowners (20772) bought freehold properties while 11486 purchased sectional title homes. Estate homes were purchased by 4176 new buyers.
Brynn Janeke, chief executive of Eazi Real Estate, says young, first-time home buyers want apartments and townhouses that are move-in ready and modern; open-plan homes that may require only basic cosmetic work.
And against the background of a residential property market that is still a buyer’s market, most purchasers are still looking for good deals. “The low-interest rates have certainly increased the buyer pool, but there remains a strong demand for well-priced homes.” Other non-negotiables for first-time buyers – and even millennial tenants – according to Paul Stevens, chief executive of Just Property, are:
High-speed internet access.
“Millennials were our first digital natives and the majority work, play and socialise on their devices… They will expect/demand always-on, highspeed internet access.” As load shedding is a part of life in South Africa, he says a UPS that can keep the wi-fi going for a couple of hours will be a great attraction.
As young buyers focus on their impact on the environment, their homes will have to meet high green standards. This includes ways to painlessly cut energy consumption as well as having solar geysers and gas appliances that meet their values and will help save them money. “Grey-water/rain-water reuse and rubbish recycling systems will also get the thumbs up.”
Whether they’ve bought the home themselves and need to let a room to cover their bond, or have gone in with a friend to secure their first home, young people want home-sharing options. Requests include parking for multiple cars, multiple access points and private areas on the same property, says Stevens.
“Security is obviously key for everyone in South Africa, particularly young, single women. Sectional title is attractive for this reason, as are gated communities for the higher earners.”
Space for working remotely
Millennials are hybrid workers and so these buyers, especially those with children, will be looking at prospective buys through the prism of own spaces for themselves and their kids, Stevens says.
Andrew Carnegie (1835-1919), entrepreneur, business leader and a man often described as one of the wealthiest people of all time is quoted as saying: “90% of all millionaires become so through owning real estate”.
And Shaun Rademeyer, chief executive of MultiNET Home Loans, says not much has changed. “Property investment is still considered to be one of the biggest investment opportunities of all time. Buying a property can leave a dent in the bank account, but do not see it as a grudge purchase, instead see it as an investment.”
Breaking this down, he explains that, if you buy a house worth R1.2 million:
- In 10 years, your property will be worth R1.8m – this is an inflation growth of 4.5%.
- In 15 years, your property will be worth R2.3m.
- At the end of your 20-year loan period, your property will be worth R2.76m.