Snapshot Of First-time Homeowners In SA Residential Property Market

First-time homeowners in South Africa are according to Lightstone entering the market at a later or older age than ever before - they spend more on their houses and are also staying in the houses for quite a longer period than before. .

Natural persons own 5,9 million of the approximately 7 million residential properties in South Africa while 1.1 million are being owned by legal entities. Of the 5,9 million properties, 69% are owned by one person, 30% by two people, and 1% have more than two owners.

An analysis of data by Lightstone shows that 68% - just more than 4 million - of the 5.9 million residential properties registered at the Deeds Office are owned by First Time Owners, which includes First Time Buyers and recipients of RDP/subsidised houses.

Lightstone defines a First-Time Owner as a natural person who for the first time owns a residential property (registered in their name either as a single owner or co-owner at the Deeds Office). This includes any person who has purchased a property, inherited a property, been gifted a property or been a recipient of a RDP/subsidised house. A First-Time Buyer is a natural person who purchases a residential property (whether through financing or cash) for the first time.

Even when all properties valued under R400k (current value, not purchase price) to adjust for RDP subsidised houses are excluded, First Time Owners still account for 59% of stock. 

1: % of sales to First-Time Buyers

Property sales to First-Time Buyers have during the last 18 years increased from about 40% of all sales in 2005 to just over 50% in 2020. It has however marginally declined during 2021 and 2022 to just below 50%.

Ten years ago, most First-Time Buyers were aged between 20-30, but this has changed and 30-40 year old First-Time Buyers now outnumber the 20-30 year olds. The most active First-Time Buyer age group at present is the 30 years old - who concludes just more than 5% of sales. Ages 29, 31 and 32 are also about 5% or just below 5% per year grouping. Ages 27 and 28 are also buying between 4 and 4,5% of all First-Time Buyers properties, whilst the age groups between 33 and 36 years old also forms between 4% and 4,5% of all sales.

2: Age distribution of First Time Buyers current vs 10 years ago

While First-Time Buyers are older than they were ten years ago they are spending more on their first home than their predecessors. The following graph illustrates the average value of property that First-Time Buyers of a certain age are buying, compared to ten years ago. Rather than purchase prices Lightstone uses the current value of the properties, to make it comparable. On average 23 year olds now buy properties valued 4% higher than 10 years ago. The ratio with which the values of current purchases exceed those of 10 years ago ranges between 1% and 4% for the under 30 year olds, but is much more significant (4%-8%) for the ages between 30 and 40.

3: % with which average recent property value per buyer age exceeds that of ten years ago by age

More than half of First-Time homeowners have owned their homes for more than 20 years, and within this group we find that 43% are owners of houses under R400k in value.

4: How long have First Time Buyers owned their properties?

More than 50% of First-Time Owners have had their properties for more than 20 years.

Only 20% of properties valued under R400k is owned by First-Time Owners who took ownership within the last 10 years, whereas 40% of those with properties valued above R800k bought within the last 10 years.

Most First-Time Buyers were under 40, and bought properties which are worth less than R1m in current value, when they bought their homes

5: Age of First Time Buyers at time of purchase

Most First-Time Buyers were under 40 when they bought their homes, but 42% of them are now above 60 and still occupy the same home, as the two graphs below demonstrate.

6: First-Time Buyers current age

If we look at the current trend of First Time Buyers, most sales are on properties valued between R400k and R1m, and coming from 30 - 40 year olds.

7: Recent First-Time Buyers

Single First-Time Buyers are becoming more prevalent

Single ownership for First-Time Buyers has grown from 67% 10 years ago to 72% over the last two years.

Of those First-Time Buyers who bought recently, 10% bought in Estates, 67% in Freehold and 23% in Sectional Schemes.

The make-up of buyer type within the different property types can be seen below. Just more than 20% of Estate sales are to First-Time Buyers whereas more than 50% of Freehold sales are going to First-Time Buyers.