Young South Africans are not shy to spend a little extra when buying property 

Published August 2024

More buyers are waiting until their late thirties before purchasing a home, but those who do invest in property when they are younger tend to spend more on their dream homes.

Data from Lightstone (Property Newsletter May 2024) shows that property sales for buyers between the ages of 26 and 35 have dropped by 25% in the past six years. It’s likely that increased inflationary pressures such as rising living costs, fuel prices and most recently, higher interest rates, have made younger buyers more hesitant when it comes to buying property.

But it is encouraging that, according to Lightstone, 71% of buyers under the age of 35 are first-time buyers. This bodes well for the next few months when an expected drop in interest rates is likely to reinvigorate sales activity. We should expect to see more younger buyers considering property as a valuable investment.

Furthermore, Lightstone’s data shows that buyers under the age of 35 are paying more for their homes. In 2018, only 29% were spending between R1m and R3m on their home. In 2023, this increased to 36% of buyers in this age group. With younger buyers spending more on their homes, the percentage of buyers under the age of 35 spending between R250 000 and R500 000 dropped from 34% in 2018 to just 25% in 2023.

Similar trends are reflected in BetterBond’s data for May which shows that in the past 12 months, the average income of applicants between the ages of 31 and 40 was R55 214, and buyers within this income bracket spent an average of R1.3 million on their homes.

Many of these younger buyers are purchasing homes in housing developments. Impumelelo, a housing development project in the Sedibeng Municipality of Gauteng, accounted for 857 transactions by buyers under the age of 36 between 2023 and 2024. There were also a significant number of purchases by this age group in Sky City in Ekurhuleni and in Belhar in Cape Town.

Affordability is key for these younger buyers and in Sky City, for example, it is possible to buy a three-bedroom home for under R990 000 – well below the R1.1 million transfer duty threshold. Buying in a new development is one way of avoiding hefty transfer duties which can inflate the cost of buying a home.

Many of South Africa’s larger banks also offer loan products of as much as 110% for young professionals under the age of 30. This has made homeownership more accessible to younger buyers, with many able to spend more on their purchase.

BetterBond’s data puts the average age of first-time buyers at 37, and Lightstone reports that 40% of the sales activity in 2024 is driven by buyers between the ages of 36 and 49. This is up slightly from 2018 when this age group accounted for 37% of all sales activity. BetterBond’s data shows that buyers between the ages of 31 and 40 are spending an average of R1.4 million on their homes.

Interestingly, buyers over the age of 65 now account for 8% of all sales activity, reports Lightstone, up from the 6% in 2018. BetterBond’s data also shows that the average purchase price of buyers over the age of 60 has increased by 6.81% for the 12 months ending May, to over the R2.1 million threshold. This may well be a result of more mature buyers returning from overseas, and being able to spend more on their homes, or even buying as a collective with family members in line with the shift towards multi-generational living.