Around the world, young working people are increasingly attracted to home ownership rather than renting – and in fact are often skipping the rental step altogether by staying on in their parent’s homes until they have worked for a few years and saved up enough for a deposit on a home of their own.
The strongest motivation for such buyers at the moment is obviously the low mortgage interest rates being offered by the banks – notwithstanding the recent 0,5 percent increase in rates - which make it easier to qualify for bonds at an earlier age, and of course also mean lower monthly bond repayments, says Berry Everitt, MD of the Chas Everitt International property group.
“In fact, in many parts of SA now, young people are finding that the monthly home loan repayments they would be required to make are lower than the rentals being charged for similar properties. What is more, rentals are rising and set to go higher.
“The latest figures from PayProp, for example, show that residential rentals rose by an average of 10,8% last year, and that a growing shortage of rental properties is likely to see further steady growth this year.”
Writing in the latest Property Signposts newsletter, he says that as an added attraction for young people, there is still a good possibility now of acquiring a property at a very competitive price and seeing its value increase substantially as the market speeds up.
“Absa figures show, for example, that the average price of small homes rose only 4,3% in the whole of the year to end-September 2013, but that the rate of growth in this sector of the market was well up in the third quarter to almost 2%.”
But whatever motivates them, Everitt says, young buyers are becoming an increasingly important component of the market and home sellers as well as developers and agents would do well to take into account their preferences.
“Younger buyers – typically in their late 20s or early 30s, are likely to be more concerned about security than home size, for example, and generally prefer low-maintenance homes with modern kitchens, bathrooms and all-purpose living/ entertainment areas that suit a busy lifestyle.
“This does not mean, though, that they will always opt for newly-built homes. They are generally also very aware of the value of a ‘good’ address, which opens the door to many homes in mature suburbs, provided they are well-maintained, well-secured and well-priced.”
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