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