A report by Pam Golding finds that resilience in the property sector in South Africa is being fuelled by the lower price band, properties selling for less than R1 million.
The outperformance of this segment of the housing market is attributable in part to the country’s relatively young population, while the subject of affordability is an issue that is becoming increasingly important as the economy enters its sixth consecutive year of subdued economic growth.
Rising inflationary pressures and higher interest rates continue to erode household purchasing power, Pam Golding said, however, the lower price band continues to register robust levels of house price inflation. This category registered an average inflation rate of 9.4% during the first half of the year.
According to ooba, South Africa’s largest bond originator, the average age of first-time property buyers in South Africa is 34 years, while the average purchase price for first-time buyers was R820,155 during the first five months of the year – up 3% year-on-year.
The average overall purchase price is down by 0.5% year on year from R1 072 615 to R1 067 703, Ooba said, while the overall average age of bond applicants is 38.
With two thirds of the national population currently under the age of 34 years, and first-time buyers accounting for 52.5% of all mortgage applications received by ooba thus far this year, it seems likely that new homeowners will remain a dominant force in the national housing market in general, and the lower price band in particular, for the foreseeable future, Pam Golding said.
Obba said that more than seven out of 10 (71.4%) of all applications submitted by the company are approved.