Fin24.com | Cape tougher for first-time home buyers than Gauteng


Fin24.com | Cape tougher for first-time home buyers than Gauteng
  1. Fin24.com | Cape tougher for first-time home buyers than Gauteng
    news24.com
    On average, first-time home buyers have had it tougher last year, according to the FNB Estate Agent Surveys for…
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Cape Town - Only an estimated 13% of buyers in Cape Town purchased a property for the first time in 2016, according to the FNB Estate Agent Surveys.

By comparison, first-time buyers made up 22% and 24% respectively in the major Gauteng regions of greater Johannesburg and Tshwane.

"We know that the land-constrained City of Cape Town has experienced significantly faster house price growth than the rest of the major regions in recent years and has a strong net inward migration of repeat home buyers from other regions too," explained John Loos, household and property sector strategist at FNB.

"It is possible that affordability challenges in that region are 'crowding out' first-time buyers to a greater extent than in Gauteng - a key challenge for Cape Town should it wish to retain its younger skills base within that region."

READ: Property experts weigh in on 2017 outlook

Tougher time

On average, first time home buyers had it tougher last year, according to the FNB Estate Agent Surveys for 2016.

There has been a weakening in the first-time home buyer segment for about the past two years.

Estate agents surveyed estimated first-time buyers made up 20% of total buying in 2016, compared to a 26.5% high in 2014 and 24.25% in 2015.

Loos explained that entry level home buyers are arguably more sensitive to economic events and interest rate hiking. They have not yet built up substantial financial reserves and are often heavily dependent on credit in order to make purchases.

Also, couples in many cases have more buying power than a single-status buyer. Therefore, a decline in the estimated percentage of home buyers who are single-status buyers points to tougher financial times, according to Loos. This would be either due to interest rate hiking or due to a weak economy and lack of new job…

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