First-time buyers dominate home buying activity, with Free State outstripping Gauteng

First-time buyers continue to snap up properties, with a high percentage buying property for the first time in the Free State.

According to ooba Q3 2020 report, first-time buyers account for 54% of ooba’s application volumes. The Free State had the highest number with 70% of applications processed in the province. It has overtaken the Johannesburg area. In 2018, Gauteng, the country’s powerhouse was leading with the highest number of mortgages granted to those buying for the first-time.

Industry-wide data points to improved affordability and low interest rates as driving forces behind this buying activity. In some instances, buyers are getting 100% home loans making finance more accessible to buyers, particularly first-time buyers.

Read also: Low interest rates, falling prices send home buyers to affluent suburbs

Nationally, nearly 80% of first-time buyers applying for a zero-deposit bond were successful in securing home loan finance. This is according to Kay Geldenhuys, head of sales fulfilment at ooba.

The average first-time buyer is putting down a 7.1% deposit, a drop of 22% for the same period last year. As of Q3 2020, the average deposit amounted to R77 089.

Popular price bands

Under R1.5 million remains the most popular price band first-time buyers are purchasing into. In Q3 2019, the average purchase price was R1,193,944, and this rose by 9.3% year-on-year to R1,304,756 by Q3 2020.

Over the same period, the average purchase price increased by 15% to R1,082,857, according to ooba.

These are the highest levels of activity experienced by ooba in 13 years.

“Buyers who couldn’t afford to buy are now entering the market for the first time. Lower interest rates and transfer duties, particularly in the middle-priced segment are behind this shift,” says Geldenhuys.

Like many property experts, ooba remains optimistic this buying activity will continue into the foreseeable future. The mortgage originator says interest rates are expected to increase in late-2021, demand for property will remain strong in 2020.

“This is an appealing time buy property particularly for first-time buyers. It’s also a good time to upgrade to a more expensive property or buy a second property using cheaper finance.”

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