Gauteng – Biggest first-time home buyer’s market
Gauteng has become has become the driver of the first-time home buyers market, due to it’s low house price growth resulting in more affordable prices. Purchasing property for sale in the major cities of Johannesburg and Tshwane is now more attainable for first-time buyers than the coastal regions.
After two previous years of decline, the number of first-time buyers entering the market stabilized in 2016 and 2017. The improvement in first-time buyer levels can largely be attributed to the performance of the Gauteng province.
First-time buying in South Africa took a knock when an interest rate hiking cycle started in 2014. “This is typical, given that on average, younger aspirant home buyers should be far more dependent on credit to enter the home buying market, and thus more sensitive to interest rate changes than older repeat home buyers,” says FNBs John Loos.
But in 2017, the cycle changed with a singular interest rate cut of 25 basis points in July, which stabilized the percentage of first time buyers. If the interest rate continues on a stable path in 2018, the percentage of first time buyers could either stay the same or possibly increase.
Gauteng has shown to have had a low house price growth in recent years, making it a more affordable province to purchase property in, and data shows that in the major metros, such as in Gauteng, affordability has a big influence over the market. Due to its affordability, Gauteng was able to steer the average percentage of first time buyers up. The average percentage of first time buyers in Johannesburg saw an increase from 21.6% in 2016 to 25.9% in 2017, and the average in Tshwane went from 23.75%in 2016 to 26.7% in 2017.
These percentages were revealed to be above the national average estimate, and are likely due to the province being the most affordable major residential region. Buyers looking to purchase property for sale in Kempton Park, for example, were more likely to be able to afford to buy a property than in the coastal regions. Affordability is calculated as the average house price in relation to the average household income in South Africa.
