New data from bond originator, BetterBond shows that the average approved bond size has risen by almost 6% in the past 12 months, while the average home purchase price has risen only 3.3%.
BetterBond’s statistics showed that the average approved bond size in the year to end-October was R893,000, while that the average home price during the same period was R1.12 million.
Meanwhile in the first-time buyer sector, the average deposit required declined from 12.2% to 11.5% – and the actual cash amount required fell for the first time in many years, from R90,500 to R89,500, said BetterBond CEO Shaun Rademeyer.
“The average home price in this sector has, however, grown faster than the average, showing a 4.68% increase in past 12 months to R775,000. This reflects higher demand in this sector, with our statistics showing that first-time buyers now account for 47.7% of home loan applications, compared to 46.6% in the previous 12 months.”
Her stressed however, that first-time buyers only account currently for 30% of home loan approvals, which indicates the difficulty that buyers in this sector have in obtaining loans and finalising purchases.
“It also underlines the advisability of applying for loan pre-qualification through a reputable bond originator like BetterBond before they start looking at homes to buy,” he said.
Rademeyer said first-time buyers who want to keep deposit cash requirements to a minimum are focusing on properties priced at less than R900,000, which also attract no transfer duty.
“Our statistics show that the average home price paid by buyers aged between 20 and 30 in the year to end-October was R796,000, and that paid by buyers aged 30 to 40 was just over R1 million.
“In the same period, the average deposit paid for a home costing between R500,000 and R1 million was R79,000, while the average deposit paid for a home priced at R1 million to R1.5 million was R215,000 – suggesting that most purchases in the lower price category were made by first-time buyers in their 20s and 30s,” he said.
He added that the much higher average deposit in the higher price category speaks of older buyers, who tend to be repeat purchasers with proceeds from the sale of an existing home that they can and do use as deposits on their new properties.
“Our figures show, for example, that the average deposit being paid by buyers aged 40 to 50 is around R278,000, which is 22.4% of the average purchase price for that age group of R1.24 million.”