{"id":770540,"date":"2024-05-05T13:00:00","date_gmt":"2024-05-05T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=770540"},"modified":"2024-05-05T13:02:47","modified_gmt":"2024-05-05T11:02:47","slug":"what-first-time-homebuyers-can-afford-in-cape-town-joburg-and-durban","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/770540\/what-first-time-homebuyers-can-afford-in-cape-town-joburg-and-durban\/","title":{"rendered":"What first-time homebuyers can afford in Cape Town, Joburg and Durban"},"content":{"rendered":"\n

First-time homebuying activity in South Africa has dropped, with many would-be buyers deciding to save for a deposit. <\/p>\n\n\n\n

According to ooba Home Loans, homebuying activity levels in Q1 2024 slowed in the current 15-year interest rate environment. <\/p>\n\n\n\n

That said, against all odds, the average price of properties originated through ooba trended upwards, with growth of 3.1% year-on-year across both the first-time and national property price categories.<\/p>\n\n\n\n

Both segments saw growth of 4.8% from Q4 2023, with the current average national purchase price now sitting at R1,479,327 and at R1,171,798 for first-time homebuyers.<\/strong><\/p>\n\n\n\n

Rhys Dyer, CEO of ooba Group, said that 62% of the applications processed in Q1 2024 fell within the greater than R1.5 million purchase price band – an upward shift from the 59% in Q1 2023. <\/p>\n\n\n\n

\u201cConversely, a downward shift in homebuying activity in Q1 2024 in the price range below R1.5 million was recorded.” <\/p>\n\n\n\n

First-time home buying has slowed from the 56% of ooba Home Loans\u2019 applications in May 2020 to a low of 46% in Q1 2024. <\/p>\n\n\n\n

Following the drop in interest rates to 7% during Covid-19, the first-time homebuying market experienced a frenzy. <\/p>\n\n\n\n

However, the first-time homebuyers segment remains sensitive to the 15-year high interest rates in Q1 2024 (prime at 11.75%). <\/p>\n\n\n\n

\u201cWe have seen a further 3% year-on-year contraction in activity from this market segment,\u201d  said Dyer. <\/p>\n\n\n\n

\u201cThis is a clear indicator that prospective homebuyers are choosing to delay the purchase of their first property until rates begin to drop and inflationary pressures are reduced.\u201d<\/p>\n\n\n\n

That said, many of these would-be buyers are now accumulating savings to finance a greater portion of their purchase, seeing the long-term financial benefit of putting down a deposit. <\/p>\n\n\n\n

A bigger deposit reduces the monthly home loan repayments and\/or the home loan term. <\/p>\n\n\n\n

\u201cAn increasing percentage of first-time homebuyers are making the financially savvy choice of saving for a deposit,\u201d said Dyer. <\/p>\n\n\n\n

\u201c47% of our Q1 2024 applications from this market segment secured their purchase with a deposit, in comparison to 43% of first-time homebuyers in Q1 2023.\u201d <\/p>\n\n\n\n

“The average deposit from new homebuyers rose to 10.9% of the purchase price, up from Q1 2023\u2019s 9.7% and significantly higher from the average deposit of 7.3% recorded across all applications processed by ooba Home Loans in Q1 2024.” <\/p>\n\n\n\n

Properties available at roughly the average purchase price for first-time homebuyers in South Africa can be found below: <\/p>\n\n\n\n

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