April 18 2023
Better Bond, a home loan originator recently contracted research economist Roelof Botha to ascertain in which parts of South Africa, people get the best value for money when buying their first home.
“In provinces with greater population density and therefore more housing stock, first-time buyers often get better deals,” he said.
As such, first-time homebuyers in the Western Cape, KwaZulu-Natal, Free State and the northwestern parts of Johannesburg, get better value for their money than buyers elsewhere in the country.
The table below compares the difference in house prices for all buyers with those for first-time buyers, showing that first-time buyers in four provinces get 20% or more home for their loan. In Greater Pretoria and the southeastern parts of Johannesburg, it is almost 15% more than other buyers, while in the Northern Cape the price difference is around 10%.
Source: BetterBond Property Brief
The national average price of a home for first-time buyers, based on Better Bond home loan applications for the 12 months to end-March 2023, was R1.2m, said Carl Coetzee, CEO of Better Bond.
“First-time buyers in the Western Cape pay more for their homes than buyers elsewhere in the country, but in terms of price difference between these and other buyers, they are getting more bang for their buck. This helps us understand why premiums are being paid in some parts of the country,” Botha said.
The average first-time home purchase price in the Western Cape in the year to end-March 2023 was R1.5m. Around R1.45m would buy a one-bedroom apartment in the Gardens area of the Cape Town CBD, or a two-bedroom apartment in Claremont in the southern suburbs.
In the northwestern parts of Johannesburg, the average first-home purchase price was R1.2m. This would secure a two-bedroom apartment in Linden or Northriding.
In KZN, the average price for a first home is R1.19m.
“KZN offers first-time buyers considerable value for money, with more than 20% difference between house prices for first-time buyers and other buyers,” said Coetzee.
In areas such as Morningside, Glenwood and Reservoir Hills, aspirant buyers stand a good chance of finding properties priced below R1.2m.
“The government’s decision to increase the transfer duty threshold to R1.1m could kick-start many first-time buyers’ homeownership plans,” said Coetzee.
“This threshold exempts buyers from paying transfer duties on properties that sell for R1.1m or less,” he said.
First-time buyers may also qualify for bonds in excess of 100% if they meet the banks’ lending criteria. March 2023 data released by Lightstone showed that 59% of residential homes registered at SA’s deeds office are owned by first-time buyers.