The status of economies in South Africa, as a result of many things including the deteriorating business activity, has created a pool with no boundaries for first time buyers to swim to infinity. Motivated by the prevailing-historically low interest rates and further incentivised by banks’ lending appetite and sound purchasing opportunities, these buyers have the market all to themselves, as it is now a buyers ' market.
“ The average price of a home purchased by first-time buyers has been rising steadily, according to data collected by ooba. Notably, in this market, the average price paid by firsttime homeowners broke above the R1 million mark for the first time on record in January 2020, then declined marginally before surging in June 2020 as the hard lockdown regulations were eased. In January this year( 2021), the average price paid by a first-time home buyer rose to a new record high of R1.138 million before easing back to R1.12 million in April( 2021)," says the chief executive of the Pam Golding Property group, Dr Andrew Golding.
According to Dr Golding, things like the location and convenience are at the top of the priority list for many of these buyers. He says young first-time buyers are often not averse to the idea of buying a more affordable property that needs some work, as long as the
location and the price are right.
Many of these first-time home buyers who were previously renting have grasped the opportunity to gain a foothold on the property ladder, as they have realised that they can now afford such an investment, even at a lower monthly cost than their current rental payments.
Mortgage Approval Rate According to Dr Golding, of further benefit to first-time buyers is that mortgage approval rates have been rising steadily from a mid-2016 cyclical low.
“ Recent data shows that, just prior to the initial lockdown, both overall and first-time approval rates peaked in February 2020 at approximately 85.1 % and 83.0 % respectively. Since then, approval rates for both the firsttime buyer and all buyers overall have declined slightly, which may simply be attributable to a marked increase in the number of applications received rather than a deteriorating appetite for lending,” Dr Golding adds.
He says, approval ratings remain elevated when compared to prior years, suggesting that t h e aggressive interest rate cuts in the first half of 2020 have ensured that more applicants are now eligible for a mortgage than was previously the case.
SA Real Estate Investor Magazine JUNE 2021 25