Property Barometer – 1st Time Home Buying

As a percentage of total home buying, the 2nd quarter 2016 FNB Estate Agent Survey pointed to an unchanged level of 1st time buying, but the broader trend has been down since the high point reached in 2014.

According to the FNB Estate Agent Survey, for the 2nd quarter of 2016, 1st time home buying remained unchanged from the previous quarter when expressed as a percentage of total home buying.

This source of residential demand remains a significant source of housing demand, accounting for an estimated 21% of total home buying. While the percentage estimate can be volatile from quarter to quarter, recent quarters’ estimates have remained below the multi-year high point of 28%, reached in the 2nd quarter of 2014, and the smoothed trendline has recently moved lower.

This percentage nevertheless remains solid compared to the 12% low reached around recession time back in 2008.

Breaking it down to major regions, we use a 2-quarter moving average due to volatility that can come with survey sample size getting smaller. For the 1st 2 quarters of 2016, we see Cape Town as having the lowest estimated 1st time buyer percentage of 16%.

That region’s low percentage may in part have to do with affordability challenges for young buyers that may have arisen due to recent strong house price inflation.


In a follow up question, FNB attempts to ascertain the agents’ perceptions regarding the level of “1st time buyer panic” in the market. 1st time buyer panic refers to when 1st time buyers become concerned with house price inflation, worrying that “if they don’t buy now they will never be able to afford a home in future”. This is important, because widespread buyer panic can cause a housing market’s price levels to “overshoot”, contributing strongly at times to house price “bubbles”.

The sample of agents’ surveyed has pointed to a significant percentage of 1st time buyers suffering from “buyer panic” in recent surveys. However, this percentage has begun to subside over the last 3 quarters, from a high of 54% in the 3rd quarter of 2015 to 46% of 1st time buyers by the 2nd quarter of 2016.

This should be expected, given a market whose inflation remains in single-digit territory, and has broadly softened since 2014, the brief early-2016 “bump up” aside.

As it was, the still-relatively high 1st Time Buyer Panic percentages of recent quarters have probably given an inflated impression of how widespread this problem was, because it must be borne in mind that ever since the end of the pre-2008 residential boom period, overall transaction volumes levels as well as 1st time buying transaction levels have been relatively low.


Also tapering off as interest rates rise and affordability challenges mount has been the level of single-status home buyers (versus couples) expressed as a percentage of total home buying. Many of these may also be 1st time buyers.

In the 2nd Quarter 2016 Estate Agent Survey, the estimated percentage was 17% of total buying, down from the price quarter’s 19% and below the multi-year high of 20% reached early in 2014.

Like younger 1st time buyers, single-status buyers are often more constrained financially due to not being able to combine 2 incomes to be able to afford a home. In times of mounting affordability challenges, they can choose to remain out of the buying market for a longer time. 


The FNB Estate Agent Survey continues to suggest a decline in the phenomenon of 1st Time Buyer “Panic”, which may not only be reflected in the declining agent percentage estimate of the prevalence of such panic, but also in part in a decline in the 1st Time Buyer percentage.

In the near term, a slow economy, rising interest rates and a slowing residential market, are expected to lead to further broad slowing in 1st time buying both as a percentage of total buying and in total volume terms, as well as leading to a further rise in the average age of home buyers. 1st Time Buyer Panic, too, is expected to diminish in significance. This is normal in toughening economic and interest rate times, with 1st time buyers normally being more cyclical as a group than the overall market, waiting on the sidelines in larger numbers in the tougher times, and growing in number more strongly than the repeat buyer group as times improve.

Read more here: FNB Property Barometer_FNB_EA_Survey_1st_Time_Buying_Jul_2016