High Prices not the only reason young delay property purchase

High Prices not the only reason young delay property purchase

Young people are putting off buying their first home for social reasons as well as financial ones according to UK research, a phenomenon that is evident in South Africa too.

Saul Geffen, Chief Executive of MortgageSA, South Africa's leading mortgage originator says that while high prices are obviously a deterrent to young people getting onto the property ladder, huge lifestyle changes and priority shifts are a major factor.

And this may be contributing to affordability problems. According to research from UK mortgage lender GE Money Home Lending, the average age of a first-time buyer in Britain has risen by 26% over the past 30 years, from 27 in 1977 to 34 today.

"Clearly some of this increase can be put down to soaring house prices, with the average cost of a property rising by 1 436% over the period but people are shifting priorities.

"And this is similar to what is happening in South Africa as more people choose to focus on their careers, travel and delay having children. Women in particular are keen to establish their own careers before a trip to the altar."

Geffen says that worldwide there has been a move away from traditional family-oriented motivations and the desire to gain independence and experience, delays the purchase of a first home and contributes to the ongoing affordability issues faced by these consumers.

The report says that in 1977, 30% of 25 year olds in the UK were keen to buy their first place and 20% wanted to tie the knot. Today, only half as many young people name these as priorities. Also, one in 10 young people in 1977 said having children was important to them, compared with just 7% today.

The research also shows that young people today rate having satellite television above having children.

Says Geffen: "This shift in attitudes has led to an increase in the average age at which people get married in the UK - rising from 24 to 31 over the past 30 years - while people are now around 30 when they have children compared with 27 in 1977."

According to StatsSA, in 2004, the median age for females marrying for the first time was 28 years, while the median age for males marrying for the first time was 32 years.

"Young buyers need to be mindful however that their lifestyle choices may contribute to their affordability problems.

"Pursuing life experiences and leisure has increased young people's personal debt levels, while delaying house purchase meant prices were continuing to rise out of their reach.

"Buying a home is one of the most savvy investment decisions young people can ever make; it's fundamental to wealth creation."

Hello ooba news

ooba (formerly MortgageSA) welcomed the 0.5% interest rate cut announced yesterday by the South African Reserve Bank which will save South African home owners an estimated R259m in home loan repayments each month, but says more cuts are needed.

According to a new poll by South Africa's leading property listings website, nearly a third of home hunters decide that a property is right for them before they even enter the house - and a kitchen is overwhelmingly the most important room when it comes to the buying decision.

Propertygenie.co.za has entered into a partnership with fractionalownership.co.za to provide access to the latest fractional ownership listings which will be available from the 12 December, 2008.

South Africans spent over R10 billion during the festive season last year. This year ooba suggests carefully planning your holiday season spending to avoid a financial hangover in January 2009. "Festive season debt can take months to pay off in the new year," says Jenny Rushin, Provincial Sales Manager for ooba (formerly MortgageSA).

Weak economic conditions, higher interest rates and the global credit crisis have forced banks to be far more picky about who they will lend money and less generous with their lending rates. But Mary Jane Lefevre, Regional Sales Manager of ooba, said that before you apply for a home loan, there are steps you can take to improve your credit status and encourage lenders to look more favourably on your application.