FINANCE MATTERS
Driving support for SA ’ s firsttime home buyers ’ market
By Maria Nkhonjera , Centre for Affordable Housing Finance in Africa ( CAHF )
A more inclusive and targeted approach for promoting adequate housing must prioritise support for first-time home buyers stepping onto the property ladder .
This includes attention to the supply of lower-priced units in the new build and resale markets , as well as the availability of end user housing finance . Drawing on title deeds data obtained from Lightstone , this analysis of first-time home buyers shows how the housing market is growing , and the most critical avenues households rely upon to achieve ownership .
OVERVIEW OF FIRST-TIME HOME BUYER MARKET ACTIVITY
In 2019 , approximately 94000 households became home buyers for the first time , accounting for 42 % of all formal residential transactions ( on South Africa ’ s deeds registry ). Almost half ( 45 %) of first-time home buyers entered the property market at the low end ( properties valued below R600000 ), thus acting as significant drivers of transaction activity in the entry and affordable markets .
The proportion of low end , entry market transactions by firsttime home buyers has decreased over time , accounting for 50 % in 2009 , compared to 25 % in 2019 . At the same time , the luxury market ( properties over R1.2 million ) accounted for only 6 % of first-time home buyer transactions in 2009 , tripling to 18 % in 2019 . This could indicate the more significant role played by government-subsidised housing programmes in earlier years , but also increasing obstacles to low-income households looking to purchase a home . In 2019 , for example , 21 % of first-time home buyers were beneficiaries of new governmentsubsidised housing . Another 8 % formally purchased a government subsidised property on the resale market . The first-time home buyer ’ s resale market is significantly more active than the market for new build properties . In 2019 , 82 % of all residential transactions by first-time home buyers were resale , while 18 % were new transactions — indicating that the resale market is the main means for first-time home buyers to step onto the property ladder .
PROVINCIAL TRENDS
In 2019 , more households were becoming first-time homeowners in Gauteng than any other province . Gauteng accounted for the largest ( 44 %) number of transactions by firsttime home buyers in 2019 , while the lowest number of transactions was recorded in the Northern Cape , making up only 2 % of the total transactions . With respect to market segments , one third of first-time home buyer transactions in the Western Cape were valued below R300 000 , the highest proportion across the provinces , likely driven by the inclusion of government housing beneficiaries in this figure .
In 2019 , the province where first-time home buyers were most likely to use a bond to buy their home was Gauteng , where over two thirds of first-time home buyers accessed housing finance to make their purchase . In contrast , the majority of first-time home buyers in Limpopo ( 73 %) and the Western Cape ( 55 %) made their purchase without a bond .
The Western Cape ( 43 %) and Gauteng ( 23 %) accounted for the largest share of government subsidised property transactions by first-time home buyers . Of the total first-time home buyer market in South Africa , 29 % were transactions of government-subsidised houses – highlighting the critical
20 JULY - AUGUST 2021 SAAffordHousing saaffordablehousingmag SA Affordable Housing www . saaffordablehousing . co . za