- The impact of the lower interest rates is evident in the 31-to-40 age group, which comprises the most first-time home buyers.
- The average purchase price of a first-time home is sitting at around R1 million since October last year.
- Young buyers are looking for property that is "move-in ready, modern and open plan".
First-home buyers remain a big driver in the residential property market, with the average purchase price of a first-time home sitting at around R1 million since October last year - a significant increase compared to previous years, according to Carl Coetzee, CEO of Betterbond.
Two years ago, the average first home buyer was spending under R900 000 on a home. Since the beginning of the year, however, the average house purchase price of a first-home buyer applying to BetterBond for a bond has increased by 15%.
The Western Cape has the highest average purchase price for first-home buyers, at just over R1.4 million. Other areas where first-home buyers are looking at properties with price tags of more than R1 million include greater Pretoria, Johannesburg, the North West, KwaZulu-Natal, Northern Cape, Nelspruit and Mpumalanga.
Brynn Janeke, CEO of Eazi Real Estate, says buyers who previously may have rented are increasingly looking for apartments and townhouses that are "move-in ready, modern and open plan". Many of these buyers start out in the sub-R2.5 million band.
The average age of a first-time home buyer applying to BetterBond is about 36. In the 20-to-30 age range, the average purchase price for home buyers has risen by almost 20% and they generally buy homes at about R1.1 million.
Coetzee believes low interest rates have made property more accessible. Five consecutive repo rate cuts in 2020 have resulted in a prime lending rate of 7% - the lowest it has been in 55 years.
The impact of the lower interest rates is also evident in the 31-to-40 age group, where most first-home buyers usually are. The average purchase price for these buyers is about R1.3 million - up 13.4% over the past 12 months.
The latest Lightstone Residential Property Index also found a positive impact of the favourable interest rates across all market segments. It puts annual house price inflation at 4.6% at the end of April 2021. The current annual inflation rate is 4.56%.