City risks losing vital skills

Young buyers are being priced out of the property market

CAPE Town could lose out on valuable skills if it doesn’t make space for first-time homebuyers, warns FNB Household and Property Sector strategist John Loos.

Viewing FNB’s annual survey average by major region, it is noticeable Cape Town “returns by far the lowest estimated first-time buyer percentage of 13%,” he says.

By comparison, in Gauteng, greater Joburg returns 22% and Tshwane 24%.

“We know land-constrained Cape Town has experienced significantly faster houseprice growth than the rest of the major regions, and has a strong net inward migration of repeat homebuyers from other regions too.

“It is possible 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.”

First- time homebuyers nationally were down by more than 30 000 buyers last year, according to the latest Lightstone statistics on this market.

Statistics showed a drastic decrease in the numbers of people buying homes for the first time from 2015’s high of 105 712 to 72 771 last year.

Lightstone says the drop reflects the poor performance of the property market last year.

And, according to the four quarterly FNB Estate Agent Surveys through 2016, on average things appeared to get tougher for first-time homebuyers last year.

“This group of entry-level homebuyers is arguably more sensitive to economic events and interest rate hiking, having not yet built up substantial financial reserves and are often heavily dependent on credit to make purchases,” says Loos.

“The estimated level of first-time buying is typically more cyclical than that of repeat homebuyers, growing faster than repeat buying levels in good financial times, and weakening faster in tougher times.”

Loos said it was not surprising the sample of estate agents surveyed throughout last year estimated first-time buyers to make up 20% of total buying. This is the second year of decline, from a 26.5% high in 2014.

The Lightstone statistics also showed more than 900 people over 70 and about 600 under 20 became homeowners for the first time last year.

But most first-time homebuyers were aged between 26 and 40.

Lightstone said in the Western Cape, the suburbs of Delft, Parklands and Pelican Park had the most first-time buyers.

“More than anything else, affordability and ease of access

time buyers

to work, shops, schools and services are the primary drivers behind where new market entrants decide to buy.”

Interestingly, says Lightstone, the suburbs chosen by first- time homeowners are not the same as those secondtime (and subsequent) buyers decide on.

“We have found first-time owners have a unique set of criteria that drive their decision-making process.

“They are also demographically different from people buying second or subsequent homes.

“The factors that distinguish first-time homebuyers from others are their age, career stage and needs.

“First-time buyers tend to be younger, have settled down in their chosen career and have a stronger need for a lock-upand-go style home.

“What’s interesting, but not surprising, is many suburbs where first-time owners buy are not only mid-value, but split between mid- and highvalue.”

Five of the top 10 suburbs favoured are in Gauteng and offer a selection of low- to mid- value properties. They are mostly new and are Pro- tea Glen, Soshanguve KK, Soshanguve NN, Delft and Pelikan Park. Three of the top 10 suburbs – Equestria, Greenstone Hill and Paulshof – consist primarily of high-value sectional schemes and estate properties.

The remaining two – Parklands and Weltevreden Park in Cape Town – are older and have been established for more than 15 years, offering mostly freehold type of properties.

Suburbs with a lower average value, such as Soshanguve and Pelikan Park, have a significantly higher proportion of first-time homebuyers aged between 40 and 60.

In Weltevreden Park, Protea Glen and Parklands, the age of first-time buyers mostly ranges between 26 and 35.

Data used in Lightstones’ report is for the period from the start of 2012 to the end of October 2016.

Affordability is the main consideration for couples buying their first home.