First-time home buyers in the Western Cape, KwaZulu-Natal, Free State, and the north-western parts of Johannesburg, get better value for their money than elsewhere in South Africa.
This, said research economist Dr Roelof Botha in the BetterBond Property Brief last month, is because provinces with greater population density and, therefore, more housing stock, often give first-time buyers better deals.
The national average price of a home for first-time buyers, based on BetterBond home loan applications for the 12 months ending March 2023, is R1.2 million, says chief executive Carl Coetzee.
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The table below compares the difference in house prices for all buyers with those for first-time buyers, and shows that first-time buyers in four provinces get 20% or more home for their loan. In greater Pretoria and the south-eastern parts of Johannesburg, Botha says it is almost 15% more than other buyers, while in the Northern Cape the price difference is around 10%.
Coetzee says first-time buyers in the Western Cape pay more for their homes than buyers elsewhere in the country, but in terms of price difference between these and other buyers, they are getting more bang for their buck.
“This helps us understand why premiums are being paid in some parts of the country.”
BetterBond data for March 2023 puts the average first-time home purchase price in the Western Cape at R1.5 million. A quick search of property listings shows that R1.45 million will buy a one-bedroom apartment in the Gardens area of the Cape Town CBD, or a two-bedroom apartment in Claremont in the southern suburbs.
In the north-western parts of Johannesburg, the average first-home purchase price is R1.2 million. This would secure a two-bedroom apartment in Linden or North Riding.
In KZN, the average price for a first home is R1.19 million.
“KZN offers first-time buyers considerable value for money, with more than 20% difference between house prices for first-time buyers and other buyers,” says Coetzee. In areas such as Morningside, Glenwood and Reservoir Hills, aspirant buyers stand a good chance of finding properties priced below R1.2 million.
Purchasing a property is an important first-step in using property to create generational wealth, says Rhys Dyer, chief executive of ooba Home Loans. Even though South African homeowners are tightening their belts following the recent announcement of another 0.5% increase in the interest rate, he says that, in a high-interest rate environment, it is “imperative” to take a long-term approach to property investment .
“And remember that this is all part of a normal interest rate cycle.
“Interest rates go up, but they also go down. In fact, we have experienced six drops to the repo rate in the last four years alone”.
In South Africa, he says, property is still an attractive asset, and taking a long-term approach to investing is one of the best ways to build generational wealth.
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