According to the latest BetterBond Property Brief, the average deposit required for first-time homebuyers to secure home loan approval has declined from just under R200 000 a year ago to an average of R169 000 currently.
This is a most welcome development and is helping to boost the percentage of home loan applications by first-time buyers, which had fallen off drastically in the wake of the interest rate increases that began in late 2022. Both Absa and FNB have reported that first-time buyers are once again generating more than 50% of home loan applications.
A cumulative 100 percentage point interest rate reduction since September 2024 has also helped to make homeownership more affordable for all prospective buyers, and at the same time, the average income of first-time homebuyers has increased by 8% over the past two years. It currently stands at R47 000 a month, compared to an average of R65 000 for repeat buyers - which is only 2% higher than it was in 2023.
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Meanwhile, house prices have continued to grow, albeit slowly, and the average price paid by first-time buyers has risen from just over R800 000 five years ago to just over R1,2m in the first quarter of this year.
This accounts for the fact that the percentage of home loans granted for less than R500 000 has declined sharply over the past three years, although loans in the R500 000 to R1,5m range still account for 54% of the total.
More good news is that recent data from Lightstone shows that 69% of first-time buyers are under the age of 35 – and that buyers aged 20 to 35 (Gen Z and younger Millennials) accounted for almost a third of all home purchases in 2024, making them the second biggest buyer group now.
This is a very encouraging sign of renewed confidence in the housing market, with more young people being prepared to make long-term commitments and buy rather than rent.
This is confirmed by the latest Absa Homeowners Sentiment Index, which shows that the market confidence level of first-time buyers has risen from 51,2% a year ago to 52.8% currently.
