The average age of a first-time home buyer in South Africa – and how much money they earn

New data from bond originator, BetterBond, shows that the majority of current home buyers (52%) are repeat buyers who are giving real estate a vote of confidence by re-investing the proceeds of their own sales.

BetterBond’s statistics show a 4% year-on-year increase in the household income of the average repeat buyer at end-September to R56,000, and a 5% year-on-year increase in the household income of the average first-time buyer to R37,000.

This accords with the BankservAfrica Salaries Index, which shows that real (after inflation) salaries in SA increased by 1.1% in August – which was the sixth consecutive month of growth.

Using deeds data transactions by individuals, FNB estimate buying trends by age group. “The results appear to support what the estate agents have seen in terms of a weakening in 1st time buying since 2014,” the lender said.

While a rising average age of home buyer is a longer term structural change, FNB said it has seen strong shorter run cyclicality in the data too. The average age of individual property buyers began to increase steadily from around 2014, it said.

After averaging 43.05 years in 2014, the average age of individual buyer has risen to 44.16 for the 12 months to August 2017.

The percentage of total buyers that are below the age of 40, from where most first-time buyers emanate, has declined from a 12-month average of 49.1% for the 12 months to March 2012, to 42.94% by the 12 months to August 2017.

This decline, the lender said, comes after a prior increase in the percentage of below-40 buyers from 2009 to 2011, as interest rates were cut dramatically at that time and the economy emerged from the 2008/9 recession.

According to BetterBond CEO, Shaun Rademeyer, there is underlying strength in the market, which is further evidenced by the fact that the percentage of loans formally granted has risen over the past year from 59.2% to 61.4% of applications, with both repeat and first-time buyers displaying an increased determination to proceed with their purchases in spite of SA’s current socio-economic problems.

“However, while the average approved bond size showed a year-on-year increase of 5.2% at end-September to R886,000, the average home price paid increased by just 2.8% to R1.1 million.

Similarly in the first-time buyer sector, the average approved bond size increased by 4.7% to R680,000, while the average home price paid increased by only 3.9%.

“This suggests that there is still strong downward pressure on prices, and that is confirmed by an analysis of the number of home loans being granted in each price category,” Rademeyer said.

The statistics show that in the past 12 months, the number of loans granted for more than R1.5 million increased by just one percentage point to 21.4%, while the majority of loans continued to be granted in the R500,000 to R1 million purchase price range (39.5%) and the R1 million to R1.5 million range (17.5%).

“In addition, the banks continue to apply very strict criteria when it comes to granting new credit and to evaluating properties for home loan purposes, and consumers who apply for home loans without the assistance of originators are struggling to obtain approvals even when they are in good financial shape.

“Our high approval ratio is due in large measure to the knowledge and experience of our home loan consultants and their ability to motivate individual applications to the correct lenders. This more than doubles the chance of prospective home buyers having their loan applications approved.”

Read: 3 reasons why now may not be the best time to sell your house

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The average age of a first-time home buyer in South Africa – and how much money they earn