First-Time Buyers Are On The Increase
Category Residential Property News
A rise in activity of one sector of buyers in the property market is rarely attributable to a single factor, but given the current, still sluggish state of most other sectors of the economy, it’s a positive and telling sign. According to the Third Quarter 2014 FNB Estate Agent survey, first-time buyers across the country are on the rise, making up over a quarter of all home buyers, and all signs indicate that, although the interest rate increased marginally in 2014 – and is likely to do so again in the short term- this percentage will remain steady and even increase. In South Africa, given the emerging market and their increased buying power – unemployment notwithstanding – it stands to reason that the numbers of potential or eligible first-time home buyers would rise. But other factors always come into play, and it’s only in the past few quarters that this sector has shown growth.
There’s always the so-called fear factor element, where constant reports of a shortage of stock – particularly in the lower to middle price range - jolts young buyers into moving swiftly so as not to miss the boat or be forced to buy as prices rise in response to the demand. Estate agents around the province report increased numbers of first-time buyers at show houses and units in the more affordable brackets, and they’re finding the banks more amenable to extending loans. A number of these buyers have the preferred deposit required, but even those requiring 100 percent bonds are not eliminated from the race.
An interesting aspect of this, is that the increase in first-time buyers coincides with an interest rate hike, but it needs to be born in mind that the hike was small, and by South African standards, the interest rate is still pleasingly, attractively low. Although banks would normally be cautious about extending loans when rate increases are likely, estate agents believe today’s new buyers are a great deal more savvy about the complexities of home loans, how to meet application criteria, and the implications of future rate increases. The free access to information available to young people means many more of them come armed and ready.
Clearly, young couples can pool incomes to present a stronger case for a home loan, but singles too, with good steady incomes, are also a significant part of the mix.
First-time home owners want a foot on the first rung of the South African property market, a market which is clearly stirring after a few sluggish years, and is showing strong signs of buoyancy in a number of sectors. Demand for entry-level property is there, and those first-time homeowners who’re beginning to understand the value of property as part of a balanced portfolio for their future, are knocking on estate agent’s doors, researching property, and recognising that this is a good time to get involved in a strong, stable sector of the economy. Encouraging signs for the country.
Author: Anne Schauffer
