Statistics by property group Lightstone have shown that millennials in South Africa are purchasing homes in great numbers in recent years.
Almost 330 000 millennials bought homes in the country between 2015-2017 and 70% of them were first-time homebuyers.
Absa Home Loans Head of Customer Strategy and Engagement Nondumiso Ncapai says for most people, buying a first home can be a daunting prospect. “It is often the single biggest investment they will ever make, and it means a long-term commitment.
“While millennials may face a number of financial and other barriers entering the property market, statistics show that a fair number of our young people are buying homes,” says Ncapai.
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The Lightstone data also showed that 39,1% of the 330 000 millennials who bought homes from 2015-2017 were buying in the R250 000-R700 000 price category, with 36,1% buying homes in the price bracket of R700 000-R1,5 million.
This implies that more than 75% of millennials bought homes starting at R250 000 up to a value of R1,5 million in the three-year period.
Almost 14% of millennial homebuyers bought homes right at the lower end of the market, these are homes of less than R250 000, with 10,8% of millennials who bought homes at the upper end of the market, those with a value of R1,5 million to R3 million and more in 2015-2017.
Interestingly, a fair share of the millennial demographic were repeat-homebuyers.
Most of the millennials over this period, 60%, purchased sectional title properties, most likely due to lifestyle and financial reasons. Some 27% of millennials preferred to buy freehold properties, while 13% of them bought homes in lifestyle estates during this period.
A significant number (35,9%) of millennial homebuyers in this period were living in some of the country’s major metropolitan areas.
Most of them were based in Gauteng in Pretoria and greater Johannesburg, followed by Cape Town, Durban and Port Elizabeth.
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“It makes sense that the majority of millennial homeowners are based in Gauteng, as it is the economic hub of the country,” she says.
Here is Ncapai’s advice for young people who wants to purchase their first home:
- Be fully aware of your financial position and prospects, while saving as much as you can for a deposit on a property.
- If you can afford it, pay extra capital amounts or extra funds into your monthly mortgage bond, over and above the required minimum amount as this shorten your bond period and also decrease your loan interest.
- Shop around and look for properties in different areas, including areas which are undergoing a revival. You might initially be moving into a slightly unpopular neighbourhood while paying a relatively low and an affordable price, but the neighbourhood could be a popular and sought-after suburb in a few years’ time, which will be reflected in increased property values.