How much money the average first-time buyer is paying for a house in South Africa
The average price paid by first time home buyers rose by 5.8% in the 12 months to end-September due to an uptick in demand in this sector.
This is according to mortgage originator BetterLife Home Loans, which said that the average first time buyer is paying R739,000 for a house in South Africa
“Our figures show year-on-year growth of 0.1% at end-September in the percentage of home loan applications made by first-time buyers, compared to the 3.9% decrease in the previous 12 months,” said CEO Shaun Rademeyer.
Data published by FNB earlier in the year showed that average purchase price of first-time buyers was approximately R801,000.
“The rate at which home prices in this sector are growing has picked up and the average percentage of purchase price that first-time buyers are paying in cash as a deposit has also increased in the past year, reaching 12.2% at end-September compared with 11% in the previous 12 months,” Rademeyer said.
“This compensates for the fact that the 4.3% increase in the average home loan amount granted to first-time buyers has fallen short of the 5.8% increase in the average home price, and underlines the continued determination among young people to become home owners.”
Read: What SA banks say about raising the deposit requirements for home loans
Buyers in this sector, Rademeyer noted, are generally people in their late-20s and early-30s with household incomes of between R25,000 and R35,000 a month.
“They usually spend around 40% of their income on debt repayment (mostly cars and credit card or personal loan balances) and 30% on rent and utilities, which doesn’t leave a whole lot for transport, food and other regular expenses, let alone savings.”
Rademeyer further pointed out that salary increases have been lagging price increases in items such as electricity, transport and food for some time, so the fact that first-time buyers are now managing to save an average of some R90,000 to put down as a deposit speaks volumes about their resolve.
According to BetterLife Home Loans, more than 52% of all buyers are currently putting down deposits of more than 10%, with the current average being 22% of the purchase price.
Rademeyer cautioned that lenders are becoming more cautious in the light of the current low economic growth scenario, and prospective buyers are having to jump through a lot more hoops in order to secure a home loan.
More on property
How much money the average house costs a first-time buyer in South Africa
Buying a house in SA just got harder as banks raise deposit requirements
Two signs that show South Africans are worried about the economy
Loading ...