Get More Space for Your Money: A Smart Guide for First-Time Buyers in 2025

If there's one important lesson for first-time homebuyers in 2025, let it be to understand the tax implications of different property choices. Knowing your way around the tax laws can help you make decisions that could save you thousands, while giving you more living space for what you're paying! The trick? Pre-owned homes could give you far more bang for your buck compared to newly-built properties.

Tax: Not as it was before

While new developments offer modern fixtures and out-of-the-box appeal, the tax advantages that once made them attractive have shifted significantly. With the current transfer duty threshold at R1.1 million, first-time buyers can acquire pre-owned properties below this amount without paying any transfer duty. However, newly-built homes still carry a 15% VAT charge, regardless of price. We recommend verifying current transfer duty thresholds on the SARS website as these figures are subject to change.

Read more: STEP-BY-STEP GUIDE TO BUYING A HOME

Today's entry-level buyers typically spend between R900 000 and R1 million on their first home. At these price points, the tax difference plays a huge role. For example, if you're buying a pre-owned home for R1 million, you'll pay minimal transfer duty, while a newly-built home at the same price includes approximately R150 000 in VAT.

The cost difference becomes even more striking when construction costs are factored in. Ongoing increases in building materials and the cost of labour have created a skyrocketing price point on newly-built homes. These, in 2025, are typically 35-40% more expensive than pre-owned homes of similar size. This premium, combined with the impact of VAT, means that people who opt for pre-owned homes could potentially get up to 50% more living space for the same budget.

Location, location, location

Read more: Homebuyer's checklist: House-hunting with confidence

This value proposition has sparked renewed interest in established suburbs, particularly those offering:

• Proximity to business districts

• Access to quality schools

• Well-developed public transport networks

• Established community infrastructure

• Local amenities and shopping centres

On the other hand, newly-built homes offer advantages like:

• Modern energy-efficient designs

• Lower maintenance requirements

• Enhanced security features

• Contemporary fixtures and fittings

There is a definite growing trend among young professionals and families choosing character-filled properties in established areas. Some of the most popular property choices are:

• Recently renovated city apartments

• Pre-owned townhouses in secure complexes

• Smaller houses in well-established suburbs

• Properties within improving urban districts

Future-forward vision

These buyers are often buying their homes with a vision in mind, and can see the potential in properties that might not look traditionally "nice" to start off with. These homes might need some updating or renovations, but those who go for this type of property tend to view it as an opportunity to build equity. These investments contribute to the renewal of neighbourhoods and help to create vibrant communities.

Finally, many of these areas are seeing an uptick in property values, thanks to young homeowners pushing money into renovations and community improvement initiatives. This urban regeneration, in turn, is attracting small businesses and creating local employment opportunities, making these neighbourhoods even more attractive to future buyers.

Remember to consult with a qualified real estate professional to help you understand the full implications of your property choice and to get detailed insights into specific neighbourhoods and properties that match your needs and budget.