First-time home buyers are getting older
First-time home buyers in South Africa are getting older - largely because they are adopting a "wait and see" approach towards rising interest rates before abandoning the less financially restrictive rental market.
But the majority, when they did buy, opted for properties in the R460 000 to R470 000 range, which were still "reasonably affordable" and, with a bond repayment of between R4 000 and R5 000, on a par with the rental market, according to Jeanne van Jaarsveldt, marketing and financial director for real estate agency Re/Max.
"Most of the first-time home buyers are entering the market with the distinct objective to create an equity buffer to enable them to buy a more ideal home, 18 to 24 months later," Van Jaarsveldt said.
"Location in terms of schools, shopping centres, etc, is of no concern, as this is not a key driver in their decision making process."
ReMax's client base indicated that the primary age group of the first-time buyer was between 25 and 30. The average size of their first home was 48m² to 85m², with one or two bedrooms, an open plan kitchen/lounge and carport parking.
Manager of property finance and insurance processing for mortgage originator MortgageSA, Kay Geldenhuys, said the current profile of their first time buyers was 35 and the average purchase price R580 000. A year or two ago, the age of their average first time buyer was 28.
In South Africa, people tended to be more tempted into buying new cars when making large acquisitions, she said. "Focusing on property is not what the younger generation is doing." She added that when they did buy, their requirements were much more demanding than first-time home buyers 15 years ago.
Research from a UK mortgage lender revealed that twenty-somethings in the UK prioritised friendship and new experiences over settling into family life, creating a "new life stage" between parental and married living that did not exist in that country 30 years ago. As a result, the average age of buying a first home there today was much older than it was in the late 1970s.
"The conscious decision to choose life over home does come with its consequences, often making affordability more difficult in later life," writes GE Money Home Lending chief executive Colin Shave.
As a result, the profile of the traditional first-time buyer had changed as well. They were not only invariably older, but more likely to be single or living with a partner, friends or roommates, rather than as married couples.
Geldenhuys said 19 percent of their first-time buyer population was purchasing jointly with an individual who was not a spouse.
Article by: Dominique Herman - www.iol.co.za