First time buyers now have it easier
Category Residential sales
The average home purchase price in South Africa increased by 5.6% in the 12 months to end-January, to R930 000.
Fortunately, things have generally been much easier for first-time buyers - while the average first-time home price also increased in the past 12 months to R651 000, the banks were, in most cases, prepared to finance about 91.5% of that, according to latest statistics which also show that the average home loan granted during this period covered only 83% of the purchase price, meaning that most home buyers still had to come up with a large sum of cash in order to complete their transactions.
Fortunately, things have generally been much easier for first-time buyers: while the average first-time home price also increased in the past 12 months to R651 000, the banks were, in most cases, prepared to finance about 91.5% of that, meaning they only had to come up with a deposit of around R55 000. Given the fact that there were two interest rate increases in 2014 and that consumers also had to deal with steep fuel, food and utility cost increases, the picture is still good for these buyers.
First-time buyers are generally young people with less ability to cope financially with rising interest rates and living costs, and they tend to give up on home purchases much more easily than repeat buyers. However the strength in demand among this sector, relates to the fact that so many of them stayed in the market during 2014 and bodes well for the future of the market as a whole as they outgrow their first homes and start to upgrade.
In short the good news here is that there are currently more prospective buyers in the market, a greater percentage of whom are likely to be able to qualify for home loans.
Author: Urban Link