First-time buyers take advantage of subdued house prices

First-time home buyers are snapping up houses, taking advantage of subdued property prices due to the weak economic climate and high interest rates.

Another notable trend in a Standard Bank survey released this week was that the average loan value approved for all first-time buyers in the past three years stood at R975 000.

“Standard Bank has noted a resurgence in first-time homebuyer activity in South Africa, potentially driven by expectations of imminent interest rate cuts,” says Toni Anderson, the head of Standard Bank Home Services.

The survey shows that first-time home buyers who bought properties through Standard Bank home loans forked out an average of 40% of their deposits.

Average deposit

“Four in 10 first-time buyers had a deposit, and the average deposit was 24% of the selling price.”

First-time home buyers took nearly 50% of the loans that Standard Bank registered in May.

“This included all approved home loans where at least one applicant was purchasing their first home.

“The volume of applications from first-time buyers also increased in April and May, following a notable decline in the last months of 2023 into 2024.”

The data come after the Reserve Bank’s Quarterly Bulletin released on June 27 revealed that growth in nominal residential property prices remained subdued in the first five months of 2024 and is still well below headline consumer price inflation.

Weak economic activity

The bulletin explained that this reflected weak domestic economic activity and a high interest rate environment, which continued to impact on consumer affordability.

Standard Bank indicated a recovery in the first-time homebuyers’ market since the first quarter, when the ooba Home Loans’ oobarometer indicated that the proportion of applications from these buyers had dropped to a low of 46%.

Said Anderson: “It is encouraging to see a growing proportion of first-time buyers in our book.

“As the leading lender for first-time homebuyers, we have maintained a steady risk appetite to ensure ongoing support for aspirant homeowners.

“The rise in applications and loans directed towards first-time buyers shows the market’s recognition and appreciation of our commitment.”

Bond registrations

Other notable trends Standard Bank recorded from first-time homebuyers: 48% of all bond registrations by Standard Bank in the past five years involved first-time buyers.

“In the past year, Standard Bank approved an average of 50% of all applications it received from first-time homebuyers.

“Gauteng, Western Cape, and KwaZulu Natal represent the top three provinces for first-time buyer activity.

“The past three years have been challenging for homeowners.”

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