Homeownership is a significant challenge for many, who believe and feel that it is harder for their generation to buy a home compared to their parents' generation.
While 92% of South Africans agree that owning a home is a right, a number of barriers have created a crisis that is increasingly locking out young people and low-to-moderate-income families from the property market.
Craig Mott, National Sales Manager for the Rawson Property Group, and Leonard Kondowe, National Manager for Rawson Finance, explain why the challenges exist and how to overcome them.
Q1: Why are low- and moderate-income earners struggling to move from renting to homeownership?
The challenge for low- and moderate-income earners is largely being driven by a combination of economic pressure and affordability constraints. Rising living costs, high interest rates, and stricter lending criteria have made it increasingly difficult for many households to save for a deposit while still managing day-to-day expenses.
While monthly bond repayments may sometimes be comparable to rent, buyers still need to account for upfront costs such as deposits, transfer duties, and legal fees; monthly property rates and taxes; as well as levy payments if it's sectional title property (taking into account the yearly increase of levies).
Therefore, we urge our buyers to get prequalified and know what home loan amount they qualify for; also, saving for a deposit is a big plus.
Prequalification isn’t just about getting a piece of paper to strengthen your offer to purchase. It’s also about gaining insight into your finances, polishing your credit record, empowering yourself with accurate information, and making better financial decisions as a result.
Buyers with a reasonable deposit tend to qualify for property finance more easily and get better interest rates on their home loans. The bigger your deposit, the smaller your loan. That can make a huge difference to the total interest you pay over the lifetime of your purchase. Those willing and able to put down a typical 10% or higher deposit represent a far less risky investment for lenders. As a result, they may find it easier to qualify for home finance and receive finance offers at more favourable interest rates.
For buyers looking to qualify for a home loan, applying for a home loan through Rawson Finance couldn’t be easier. Rawson Finance will get the best offers from the top lenders, negotiate the best rates, and handle all the paperwork—all at no cost to you. PLUS Get your home loan with Rawson Finance and stand a chance to win R500 000! Get more details here.
Q2: Do you believe that one of these barriers is the lack of affordable homes?
Yes, the shortage of well-located, affordable housing is a critical barrier. Demand for affordable properties continues to outstrip supply, particularly in areas close to economic hubs where employment opportunities are concentrated. This imbalance drives up prices in entry-level segments, pushing many potential buyers further away from urban centres or out of the market altogether.
Q3: What affordable alternatives are available to buyers who want better security, services and long-term value?
For buyers seeking affordability without compromising on quality of life, emerging or transitioning suburbs often present strong opportunities. These are areas undergoing gradual upliftment, where infrastructure improvements, new developments, and increased buyer interest are driving long-term value. While they may not yet command premium prices, they can offer better security, services, and community stability than traditionally perceived “affordable” zones.
Another option is sectional title living, which often provides a more accessible entry point into homeownership, typically offering lower purchase prices, reduced maintenance responsibilities, and added security features such as controlled access, compared to the costs and maintenance of a freestanding home.
Q4: Can estate agents help low- to mid-income buyers find the right property and avoid common red flags?
Estate agents have a significant role to play in supporting this segment of the market, particularly through education and guidance. Many first-time buyers are unfamiliar with the purchasing process, potential risks, and hidden costs associated with property transactions. By taking on an advisory role, agents can help clients understand affordability, identify suitable properties, and avoid common pitfalls such as overextending financially or overlooking structural or legal issues.
Engaging an agent to assist with property searches can save time and reduce uncertainty, as agents can pre-screen listings, highlight value opportunities, and flag potential red flags early on.
This personalised support not only builds trust but also empowers buyers to make informed decisions with greater confidence. In a complex and competitive market, this level of professional guidance can make the difference between remaining a tenant and successfully stepping into homeownership.
Q5: One of the solutions for these income earners is multigenerational living, with shared costs. Are there enough properties in the affordable space that cater to this growing trend?
Multigenerational living is increasingly being recognised as a practical solution to affordability challenges, allowing families to pool financial resources and share living costs. However, the availability of properties that are specifically designed to accommodate this lifestyle remains limited, particularly in the more affordable segments of the market. Many existing homes were not built with flexible layouts or dual-living functionality in mind.
That said, there is growing demand for properties that offer features such as separate entrances, additional living spaces, or the potential for conversion into dual-occupancy homes. One can address this gap with the guidance of a real estate agent by considering purchasing:
- Vacant land as a family and building your own property.
- Purchasing a fixer-upper.
- Bank-mandated properties, which are favourably priced and often come with preferential interest rates as well as discounted attorneys’ fees.
Q6: Can you name some specific neighbourhoods that are growing in popularity for their affordable housing options?
Major developing suburbs such as Midrand in Gauteng, Parklands in Cape Town, and the North Coast in KZN provide a range of properties from entry-level affordable housing to your family homes starting from R2,5 million onwards.
In the current economic climate, buyers should take the time to properly assess their affordability and stress-test their repayments. Understanding how your bond would perform under different rate scenarios helps ensure you don’t overextend yourself.
