First-time homebuyers are set to accelerate the residential property market’s recovery, according to ooba Home Loans.
According to Rhys Dyer, CEO of the ooba Group, first-time homebuyer demand is slowing recovering – edging up from a low of 45% in Q2 2024 to 46.1% in Q4 2024. “This quarter’s figures, coupled with a sharp uptick in September 2024 (51%) when the first interest rate cut was announced, reflects a positive response to market changes and sets the tone for recovery and growth in 2025,” he says.
Q4 2024 also saw a healthy increase in the average purchase price paid by first-time homebuyers as well as the average approved bond size, up by 4.5% and 6.8% year-on-year respectively.
Regionally, the Free State, the more affordable housing market, recorded the highest ratio of first-time homebuyers in Q4 2024 with 57.9% of applications received, 12.1% higher than the national average.
Interestingly, ten-year data from ooba Home Loans highlights that today’s first-time homebuyers are making their foray into the property market later in life. “In 2014, the average age of our first-time homebuyer was just under 34 years old while in Q4 2024, their average age was 36,” he notes.
In 2024, 64% of first-time homebuyers did not have dependents compared to 54% ten years ago. Dyer says that the proportion of homebuyers without dependents has risen since the onset of the pandemic, a notable trend given that these homebuyers are also becoming older.
First-time homebuyers are also increasingly tackling the challenge of homeownership jointly to get a foot on the property ladder. In 2014, 14% of this segment applied for a joint home loan while in Q4 2024, 18% of this segment is doing so.
The data also highlights an increased interest in property investment and the creation of generational wealth. “Compared to a low of 4% in 2014, 10% of first-time homebuyers are now purchasing property for investment purposes. In addition, 60% of these transactions are for sectional title homes,” says Dyer, adding that these homebuyers are increasingly seeking out cheaper properties to rent out whilst remaining a tenant themselves.
“With property prices in large cities becoming less affordable, ‘rentvestment’ is an appealing option for first-time homebuyers,” he adds.
There was consistent market recovery across various key indicators including the average purchase price, the average approved bond size, the average weighted interest rate concession, and the average approval rate.
“On average, homebuyers are now spending more on homes than they did a year ago – up by 4.3% at R1,628,654,” says Dyer. “This is the first time that our statistics have reached an average purchase price above R1.6 million, highlighting some exciting momentum.”
Similarly, the average approved bond size has increased by 5.6% over the same period, from R1.301 million in Q4 2023 to R1.375 million in Q4 2024, signaling a slight drop in average deposit from 16.6% in Q4 2023 to 15.5% in Q4 2024. This reflects a slight decline in the average deposit, dropping from 16.6% to 15.5%, which Dyer suggests may indicate an increase in the approval of 100% home loans.
Regionally, there was a significant variation across the markets with the average purchase price paid in 2024 ranging from a high of R2.29 million in the Western Cape to a more affordable R1.08 million in the Free State.
“The average price paid in the Western Cape breached the R2 million level in Q1 2021 as the ability to work from home during the pandemic encouraged a fresh wave of semigration by older, more affluent homebuyers to the province.”
A closer examination of 2024’s house pricing data reveals that the strongest growth was recorded in the Western Cape, followed by Limpopo: the only two regions in which house price growth exceeded the average consumer inflation rate of 4.4% last year.
While Johannesburg was the only market to register negative growth in property prices, monthly data reveals that house prices in the Johannesburg metro market are recovering and look set to yield growth in 2025.
The past quarter saw ooba Home Loans achieve an average interest rate for their customers of prime less 0.55% – 7 basis points cheaper year-on-year.
“Looking to our data, the average interest rate achieved improved by 22 basis points between 2021 and 2024.” Dyer notes that bank approval rates are climbing, up by 1.1% year-on-year, now at an 83% approval rate.
National demand for investment/buy-to-rent properties surged to 13.9% of total applications in Q4 2024 – up from the previous high of 11.8% in Q4 2023.
This trend was driven by the ongoing strong demand for investment and rental properties in the Western Cape, where 34% of all applications received in the final quarter of 2024 were for investment properties (compared to 29% in Q4 2023).
The Eastern Cape also registered strong growth in investment demand during Q4 2024, rising from 14% of all applications in Q3 2024 to 18%.
