The Rise of the First Time Buyer in South Africa
The young professional demographic in South Africa has expanded to the degree that more young people are in a position to buy their first home much earlier than their peers a couple of decades ago.
The increase in first time buyer activity in South Africa, particularly within commuting distance of cities is having a positive effect on the country's property markets.
Recent research shows that in 2012, 23% of buyers in South Africa were from the younger age group, comparing with 15% in 2008. First time buyers are looking for small houses, townhouses or a sectional title unit close to work and other amenities and with low maintenance a priority.
South Africa's property market has achieved stability in recent months after almost overheating, as prices rose in response to increasing demand. Experts believe that the slight slowdown of price growth seen recently is due in large part to an underperforming economy.
The latest House Price Index released by South Africa's First National Bank (FNB) also implies slowing growth with average house prices for April recording an increase of 5% year-on-year which is marginally lower than 5.2% seen in March. The FNB commented that this is in line with the continued slowing year-on-year price inflation trend of recent months.
One area that is proving particularly popular among young professionals is Kempton Park in the province of Gauteng, a suburb to the north of Johannesburg. Estate agents say Gauteng has some of the most luxurious homes, found in both the City of Johannesburg and Ekurhuleni Metropolitan Municipality. First-time buyers are attracted by the area's close proximity to Johannesburg, South Africa's largest city and Pretoria, the administrative capital.
Apart from first class infrastructure, good schools, shops and recreation facilities, the area has plenty of entertainment facilities, restaurants, sports clubs and golf courses and is also serviced by good transport links to major route, including Tambo International airport. There's also the advantage of profitable capital appreciation over the long term as the suburb expands to house their growing populations.
With demand for South African real estate being mainly driven by its young professionals, the country finds itself in a reasonably unique situation compared with other major property markets. Whereas it has been evident in residential real estate across the world that growth is driven by investment, mainly from overseas buyers resulting in restricted affordability for citizens; South African real estate is being buoyed by domestic demand and growth is highly likely to remain sustainable over time.