This is the average price for first-time home buyers in SA

Ready to take your first step onto the property market? It helps to know what you can afford, and with ooba Home Loans’ Bond Calculator, you can calculate the home loan you would qualify for and what you can expect to pay on your monthly repayments.

It also helps to know the market, and what prices you can expect. We’ve taken a look at the data and determined what costs are involved when buying a home in South Africa.

The current state of the first-time homebuyers market

Our data shows that average purchase price fell from an average of R1 117 398 in Q3 ‘21 to a more affordable level of R1 087 089 in Q3 ‘22.

Rising interest rates have had impact on the first-time homebuyers market, forcing homebuyers to scale back and select properties within their affordability range.

First-time homebuyers made up a significant portion of homebuyers during the pandemic, due to the interest rates being at their lowest in decades. But with the increases, the number has now fallen to pre-pandemic levels of 50% of applications.

The size of first-time homebuyer deposits

Deposits effectively reduce the interest rate and monthly repayments of a home loan, but represent the greatest challenge for first-time homebuyers, who may not be able to scrape together the necessary funds.

Our data shows that the average size of deposits is at 8.1% – up 14.1% from Q3 ’21 but unchanged from the previous quarter.

100% home loans provide a means to purchase a home without having to put down a deposit. Many first-time homebuyers continue to take advantage of lenders’ current willingness to approve 100% home loans.

Average home prices by area

As of July 2022, housing reports show the following average purchase prices:

• Eastern Cape R886 686,21
• Free State & Northern Cape R1 077 684,11
• Greater Pretoria R1 498 110, 92
• JHB North West R1 393 448,87
• JHB South East R1 055 201,28
• KZN R1 232 891,69
• Western Cape R1 480 449,64

The future of the market

Further interest rate increases are expected, which may lead to a lower demand for housing.

However, this in turn will cause house prices to drop, presenting an opportunity for first-time homebuyers.

Competition remains strong among home loan providers, despite rising interest rates. As such, banks are likely to approve home loan applications at this time.

You can get prequalified to determine what you’re likely to afford on a home loan. This has the advantage of proving you can provide the funds for a purchase, which in turn makes a seller more likely to accept your offer.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.