Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

Entering the property market is more affordable now

16 Oct 2015

The average home purchase price among first-time buyers has climbed steadily over the past two years from R612 000 to R652 000, and yet, it has become more affordable to enter the property market.

Rademeyer says for the moment the demand for residential property continues to grow across all sectors of the market, as reflected in 2.1% increase in the overall number of home loan applications in the 12 months to end-September.

This is according to Shaun Rademeyer, CEO of BetterLife Home Loans, who says for one, the average percentage of the purchase price required by the banks as a deposit on first-time purchases has shrunk from 8.4% to 6.8%. He says this translates to a cash saving of around R9 000.

“Secondly, the transfer duty threshold was raised earlier this year from R600 000 to R750 000, which translates into further savings for most first-time buyers of up to R4 500. And thirdly, wages have generally risen faster than house prices over the past two years, so monthly home loan instalments as a percentage of income have grown smaller.”

Rademeyer says taken together, these factors have strongly underpinned first-time buying despite the sluggish economy and the rising cost of living, to the point where such buyers still account for more than 46% of the home loan applications received by BetterLife Home Loans and 40% of all loans granted.

“This picture could, however, change quite rapidly if the Reserve Bank goes ahead with further interest rate increases this year. Having no existing property to sell in order to help raise a deposit, first-time buyers are much more credit-dependent than repeat buyers, and usually quick to opt out of the market when rates - and monthly mortgage repayments - start to rise,” he says.

“In addition, they will often find it more difficult to qualify for a loan in these circumstances, especially if they already have other debt repayments to make every month.”

Rademeyer says for the moment, though, the demand for residential property continues to grow across all sectors of the market, as reflected in 2.1% increase in the overall number of home loan applications in the 12 months to end-September. 

The BetterLife Home Loans statistics, which represent 25% of all residential mortgage bonds being registered in the Deeds Office, also show a year-on-year increase of 2% in the total number of home loan approvals, and a 15.7% drop in the number of applications that were declined outright.

“Nevertheless, the figures continue to make it clear that prospective buyers have a much better chance of their loan application being approved if they apply through a reputable mortgage originator,” he says.
Print Print
Top Articles
A pioneering partnership between Emira Property Fund and Beetle Busters, who’ve registered a treatment for the infestation, brings hope to saving our urban forests.

Cape Town at US$5 600 per square metre ranks as the most expensive city for residential property in Africa, followed by Umhlanga and Sandton. See the list...

Yearning for a country home where you can relax and unwind away from the city grind? With affordable prices, these homes in Greyton offer a soothing lifestyle…

Loading

Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.


Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724