Real Estate News - South Africa: First-Time Home Buyers Face Market Setbacks
ABOUT 20%-25% of residential property buyers are first-time home owners, slightly down from two years ago when they made up about 25%-30% of the buying market, says the latest First National Bank (FNB) Property Barometer.
FNB Homeloans CEO Ed Grondel said yesterday the residential property market was still "very active" but that first-time buyers were finding it more difficult to get into the market.
The property barometer for the first quarter of this year, which was released yesterday, measures the sentiment of 150 real estate professionals.
Grondel said the relatively expensive property market was one of the major reasons first-time home buyers were finding it more difficult. Rising interest rates were also a problem.
He said first-time buyers also had "unrealistic" expectations in that some wanted to buy properties that were relatively affordable at the beginning of the property boom in 2001 but were now out of their reach.
FNB said that "driven by anxiety to get into the property game" first-time home buyers were buying property with family members and partners to overcome the affordability issue. There was a "now-or-never mindset" among buyers who did not already own property but wanted to get a foot in the door.
The property barometer also said that the residential property market was shifting towards a buyers' market because buyers were showing "increased confidence and discernment" when it came to acquiring property.
Only about 30% of sellers were achieving initial asking prices. Meanwhile, investors buying to let decreased from 19% in the fourth quarter of last year to 16% in the first quarter of this year.
Grondel said letting agents said there was huge demand for rental accommodation in the lower to middle price range.
The lower price range refers to properties priced at less than R500000. The middle bracket consists of properties ranging from R501000 to R900000.
The premium price bracket refers to properties priced between R901000 and R2,5m.
He said rental properties in the lower to middle price range were "snapped up very quickly", while those in the "higher price range" remained unoccupied for months between rental contracts.
FNB also introduced a "bricks to motor index" which illustrates how many average-priced cars could be acquired for every average-priced residential property in different countries.
In developed countries a consumer could buy 10-13 averagely priced cars for every averagely priced residential property.
But in countries such as SA, Brazil and India, consumers could buy about four such cars for every averagely priced property, which led to the question of whether car prices were too high or whether property prices were too low, said Grondel.
He said he thought this indicated there was room for even more price growth in SA's residential property market.
Article from: http://allafrica.com