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The South African property market has seen an upswing in homebuyer activity post-elections, which coupled with competitive lending conditions and lower inflation figures present a massive advantage for new buyers looking to purchase property for the first time. 

“It is most definitely a buyers’ market and while the property market has remained fairly flat, this is good news for first-time buyers seeking to invest. As a first-time buyer you are spoiled for choice, which means you have the upper hand to ‘shop around’ to find a suitable home at a good price,” says Marcél du Toit, CEO, Leadhome.

The second quarter of 2019 has already seen a spike in offers to purchase and strong interest from first-time buyers. According to Romy Zwiers, Head of Marketing, Bondspark, Leadhome’s bond originator, buyer demand returned with a 10% increase in portal inquiries from mid-to-end May, compared to the beginning of May. “Buyers who were holding off prior to elections, feeling reassured by the stable prime lending rate were more likely to submit their bond applications. We are also seeing a lot of first-time buyers entering the property market, who are looking to take advantage of favourable lending rates, where banks are more receptive to giving 100% home loans than previous years.”

Not only do first-time buyers benefit from not having to sell an existing property, the ongoing trend of vigorous competition amongst banks to make home loans more accessible and affordable makes all the difference. Through lower deposit requirements and competitive interest rates, a significant window of opportunity for prospective homeowners has been opened. In addition, South African consumers could soon spend considerably less on loan repayments in the next 12 months should the South African Reserve Bank (SARB) cuts the prime interest rate in July as some economists expect. “A difference of just 1% interest rate can have a huge impact on the client’s pocket in terms of their monthly repayments.

For example, if you look at a buyer looking at a home loan of R1.6 million with a 10% deposit of R160 000, if they got a loan from the bank at 11%, their monthly repayment would be R14 863. However, if the bank secured the loan at an interest rate of 10%, the repayment would drop to R13 896. That would equate to a saving of as much as R232 080 over the period of a 20-year home loan,” notes du Toit.

First-time buyers and young professionals are particularly active in the lower residential property price brackets where new developments, and even more established suburbs, offer good value for money.

While current market conditions are positive for first-time buyers, the process of finding and purchasing a home can be daunting. “At Leadhome we pride ourselves in assisting experienced buyers as well as first-time buyers through every step of the process. I always advise getting a pre-qualification prior to looking for a property so that buyers have an accurate view of their affordability.  Bondspark is perfectly placed to assist buyers with this,” adds du Toit.  Prospective buyers are given comparative home loan quotes when Bondspark applies on the buyer’s behalf to multiple banks using their innovative online application, at no cost to the client. 

Du Toit says that despite current concerns around economic growth, property still provides a solid investment. “Buying a property requires a long-term outlook, which means the asset will provide good returns in the long run. The fact that banks are also open to granting 100% loans is also a clear indication of the banks’ confidence in the property market picking up.”