The slowdown in the residential property price growth is providing first time buyers with an opportunity to enter the property market.
 
The slowdown in the residential property price growth is providing first time buyers with an opportunity to enter the property market.

According to Rhys Dyer, chief operating officer at ooba, the average first time buyer’s purchase price has seen consistent growth in the past quarter.

This, he says is due to the low interest rates combined with the ongoing easing in lending conditions, especially in regard to deposit requirements.

“Higher levels of activity among first time buyers are generally a positive indicator for the housing market,” says Dyer.

The oobarometer price index, recorded a negative year-on-year price growth of 3.4 percent to R 821 579 in July 2011 from R 850 763 in July 2010.

However, the July first-time buyer's purchase price figures show a 3 percent year-on-year growth to R 609 417.

Dyer says 49.3 percent of home loan applications finalised by ooba from January to July 2011 are for first time homebuyers.  This is up 2.3 percent from the same period last year.

Sean McCauley, Rawson Properties director says according to the FNB Property Barometer, the number of first time home buyers has increased.

He says first time buyers comprise 25 percent of residential property buyers and this is the highest level achieved for first time buyers for at least five years.

“In 2008, a boom time in property, only 15 percent of buyers were first timers, therefore the growth has been in the region of 66 percent,” says McCauley.

He explains that the increase in the number of first time buyers has probably contributed to the average house price moving upwards, albeit slowly.

“It has now reached the point where at R803 751 the national average house price has broken through the R800 000 barrier for the first time.”

An increase in the number of loans being granted by the banks and the raising of the transfer duty tax exemption to homes sold for up to R600 000, had undoubtedly been a prime cause in the rise of first time buyers, he says.

“The low interest rates (the lowest in 35 years) and the fact that home prices are now very well priced have a positive effect on the residential property market.”

He notes that the rise in first time home buyers appears to be closely linked to the growth of the middle class.

“We find that property is still seen by the middle class homeowners in South Africa as the safest and most desirable asset class,” he adds.