Higher deposits and rising costs have not put off first time buyers from getting their feet on the property ladder.
Anyone reading the comments from readers on various news sites and who aren't that au fait with life in South Africa could well believe that the country is doomed and is falling apart at the seams. While no one is arguing that we have problems and that some of these problems are fairly challenging, this does not mean that the average South African has given up and has stopped investing in property.
In fact, if the latest statistics from Betterbond are any indication, the determination to own a home is stronger than before with the number of home loan applications rising by almost 3 percent last year. This despite the fact that banks are now demanding higher deposits from buyers. According to the bond originator the average percentage of the purchase price required as a deposit has risen from 16.96 percent to 17.12 percent.
This shows, says CEO Shaun Rademeyer, that the total number of home loan applications submitted to the banks by BetterBond was up almost 3% year-on-year at the end of February, indicating a similar increase in the number of offers to purchase being made by prospective homebuyers.
The deposit issue has also seemingly had an impact on first time buyers. According to BetterBond, the number of first time purchasers has dropped by 6.4 percent over the past year. However, it needs to be remembered that the average deposit required in this sector has increased from 8 percent to 8.52 percent over the same period. Despite the challenges of saving for a new home and rising electricity, food and fuel costs, first time buyers still accounted for 40.2 percent of the 37 300 home loans formally granted through the originator over the past year.
Investing in a home is not a short-term commitment and the fact that the percentage of first home buyers is still high regardless of the state of the economy or how badly some believe the country is being run is extremely encouraging. Rademeyer, hits the nail on the head when he notes that healthy demand from first time buyers is what creates the knock-on effect that enables the real estate market to expand.
At this stage, the adage 'the grass is always greener on the other side' doesn't ring true when it comes to property investment. While everything is relative, first time buyers in other countries may well find it more difficult to enter the property market. A recent report in the British newspaper The Guardian indicated that the average cost of a home in that country is £192,372 (roughly R3.5-million). Housing in Australia is regarded as among the most expensive in the world and the average price of a home in Sydney last year was AU$811,837 (approximately R7.6-million).
To put this into perspective, the average price paid for a home in South Africa over the last year was R939 000. In pounds, this translates to roughly £50 100. It's worth noting that South African homes are generally far more spacious and are set on larger stands than those in the UK. The picture is pretty much the same in Australia where R939 000 equates to roughly AU$99 000.
South African property prices, according to the stats, have risen by 5.89% in the last 12 months. Add to this our beautiful weather, a fantastic lifestyle, wonderful food and exceptional wines and it all becomes clear - South Africa is truly the place to be.