Homebuyers entering the property market for investment are likely to find opportunities for their first purchase within the affordable housing sector.
While industry commentators are noting that the property market is still stronger than it was in the 2008-09 recession, some areas are doing better than others. The top end of the market is slowing down, and the more affordable, less popular towns and suburbs are expected to experience a resurgence in interest and investment.
Homebuyers continue to seek areas that offer good value and good return on investment. These will offer opportunities for first-time buyers looking to invest, and for those looking to downscale or find a more practical way of living closer to work in order to avoid a long and often expensive commute.
Lock-up-and-go lifestyles are favoured by many, but once millennials start families they might opt for a small house in an estate as opposed to the freehold home with a garden that they might have grown up in.
The affordable property market is based on an average price of R700 000 or less and a total of 94.2% of these properties are freehold, according to Lightstone, the provider of data and analytics for the property industry. They say 31.1% of the affordable market is situated in Gauteng, 13.8% in the Western Cape and 13.8% in KwaZulu-Natal.
“The average age of the first-time buyer is 34 years. The average price of a first home is R944 000,” according to Kay Geldenhuys, Head of Sales Fulfilment, at ooba home loans.
More banks are now willing to offer 100% loans to first-time buyers especially if the purchase price is below the R1 million mark.
Areas that have traditionally been in demand have seen great return on investment but the flipside is a lack of stock or increase in selling prices, forcing people to look elsewhere for low-cost houses for sale in good locations.
Buyers entering the property market are likely to find opportunities for their first purchase within the affordable housing sector. “Here in Cape Town affordable means well above R1 million. In Gauteng it’s probably R1 million and less,” says associate professor Francois Viruly, property economist with the UCT-Nedbank Urban Real Estate Research Unit.
Having said that, Cape Town now has multiple new developments that offer not only affordable housing for first time home buyers but also a development that offers a new lifestyle, with gyms, coffee shops, restaurants, shops, schools and creches all within the secure estate. With prices starting from only R535 000 these developments are situated in some of Cape Towns most sort after areas from more central locations minutes from the CBD to the more exotic winelands.