High interest rates are making it trickier for young buyers to enter the property market.
Across the country, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, notes that sectional title properties tend to offer a good opportunity for young buyers who are looking for more affordable ways to enter the local property market.
Read: First-time homebuyers' fears - how to overcome them
"It can be tough for young buyers to enter the property market. With interest rates as high as they are, it can be tricky to qualify for the required home finance. Rather than wait until interest rates are substantially lowered (which could possibly only be in a few years from now), I would recommend that young buyers do their best to find an affordable starter home and use it as a steppingstone to help them afford their forever home," he recommends.
While a sectional title might not offer as much space as a freehold property might offer, many young buyers are already starting to see the benefits of sectional title living. A recent report released by Lightstone property stated that "those under 35 are switching to the lifestyle benefits offered by Sectional Title properties [and] are buying later with the average age of First Time Buyers being higher than it was ten years ago".
READ: Subdivision or sectional title - which option should you as a landowner choose?
Those who want to beat the statistics and purchase their first home before the age of 35 will need to know where to look to find affordable options. According to the same report, the majority (44%) of buyers under 35 are purchasing within the R500k-R1m band.
One popular suburb among young buyers who are searching within that price range is Kabega Park in Gqeberga. 43.6% of buyers in the area are between the ages of 18-35. Belinda Rossouw of RE/MAX Independent Properties notes that sectional titles are the most popular properties in this suburb, largely owing to prices being more affordable. She adds that the average price of a sectional title property in the area is about R877,500 while freestanding houses cost approximately R1,179,000. She adds that three-bedroom, single garage properties are more popular among buyers at the moment.
Looking at the Western Cape, Parklands has been one of the top five searched suburbs within SA on remax.co.za for some time now, according the RE/MAX National Housing Reports. Parklands North in particular seems to be attracting many young buyers, largely owing to its affordability. According to Lightstone Property, the average price of sectional titles in Parklands North is roughly R1 million and 48% of recent buyers in the area are aged between 18-35.
READ: Subdivide vs Sectionalise | How your large property can earn you money
In Gauteng, Germiston remains a popular option for young buyers, so much so that 75% of recent buyers are aged between 18-35. In this area, young buyers who spend just a little bit more than the average could even afford to buy a freestanding home in the area. Nadia Aucamp of RE/MAX All Stars notes that buyers could find a house for R1.5 million in Albemarle or Dinwiddie. "We have seen a decrease in demand over the last few months which is attributed to the increase in the interest rates. The opportunistic buyers are always there and ready to snatch a bargain when it presents itself," she says.
Ivan Jansen of RE/MAX One says that Ekurhuleni in general is a growing hotspot for buyers. "It is a region where many are now grasping their lifelong dream of home ownership. The attraction is that it offers more affordable properties and has some hidden gems that people can afford. First-time home buyers are finding good buys and starter homes in Ekurhuleni," he says.
READ: Affordable and Desirable: Ekurhuleni gains momentum as a property investment hub
To make sure you know where the opportunities are to be found, Goslett recommends building a good working relationship with a local real estate professional. "Real estate agents are a great resource for young buyers who are looking for ways to enter the property market. Equipped with years of experience and the largest network to tap into, a RE/MAX Agent will know where all the best deals can be found and can offer young buyers some much-needed guidance throughout their homebuying journey. If you’re a young buyer who doesn’t know where to start, make an appointment at your nearest RE/MAX Office and let the experts guide you the rest of the way," says Goslett.
SEE | Property24 101 - Buyer and Seller specific advice
Pam Naidu, Director of Sales and Marketing at Devmco Realty, shared some key learnings, in an article published on 11 May 2023, which every first-time buyer should know when deciding to purchase their dream home.
1. Location, location, location! Also known as the Three L’s:
There are three micro locations that define the actual location of a property on a macro level. If the property you want to purchase is in an estate for example, you may want to find out what area of the estate it sits in and what that actual area provides, such as a good sea views, etc.
2. Financial stability is important:
Get your credit card payments and debts in order.
3. Budget:
Establish a realistic budget to determine your affordability. Create a budget and try to stick to it so that you can enjoy the process and not put yourself under too much pressure.
4. Find a trustworthy real estate agent:
This is the person that will assist in picking out your potential home and exploring your new neighborhood and is also responsible for scheduling tours and negotiating important contracts on your behalf. Ensure that this is someone you trust, to have your best interests at heart.
5. Get approved:
Get a pre-approval letter before you start shopping! This will help you have realistic expectations on what you can afford.
6. Be mindful of transfer and closing costs:
First time buyers usually tend not to factor these costs in, and it comes as a huge surprise at the end. Doing your homework is a very vital part of house hunting.
Becoming a first-time homeowner can be an overwhelming experience and requires careful consideration of several factors. With the expert advice from Devmco Realty, first-time home buyers can make an informed decision and successfully unlock the door to their dream home.
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