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IOL News
25-06-2025
- Business
- IOL News
Your guide to buying property: tips for first-time buyers
Discover the challenges and opportunities for first-time homebuyers in the Western Cape. With insights from industry experts, learn about affordable areas, creative strategies, and the growing appeal of the region for both local and international buyers. Image: Todd Goodman The Western Cape continues to be one of South Africa's most desirable regions for property investment, luring interest from both local and international buyers. Yet for many first-time homebuyers—especially those eyeing Cape Town—the dream of homeownership can feel increasingly out of reach. According to ooba Home Loans' latest oobarometer, the average purchase price in the Western Cape during Q1 2025 stood at a staggering R2.33 million, significantly above the national average of R1.66 million. Nevertheless, activity among entry-level buyers has not waned—proof that creative solutions and alternative strategies are helping many take that important first step onto the property ladder. 'We're seeing many young professionals and investors gravitating towards the Western Cape for its lifestyle, infrastructure, and perceived safety, but affordability in the metro remains a challenge, especially for those trying to enter the market for the first time,' explains Grant Smee, CEO of Only Realty Property Group. Despite the province's high price point, Lightstone data shows that 40% of housing stock in the Western Cape is priced under R750,000. However, most of these properties are concentrated in smaller towns and rural areas. 'Investment properties are also in high demand, with the Western Cape recording a year-on-year increase of 0.5% to reach 12.9% in the first quarter [ooba Home Loans]. There is a growing trend of first-time homebuyers purchasing in the Boland and Overberg regions in smaller, outlying towns,' says Smee. 'These areas offer a more balanced lifestyle and slightly more accessible pricing, while still benefiting from the broader Western Cape infrastructure.' Within Cape Town, many new buyers are opting for micro-apartments and sectional title units in high-density, mixed-use developments. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading 'These offer security and lifestyle perks like on-site retail, communal workspaces, and gyms,' Smee adds. The province's magnetic global appeal hasn't gone unnoticed. While the local market wrestles with affordability, foreign investors are entering at the higher end. 'According to Lightstone data, the province leads in luxury price bands, with international homebuyers accounting for over 40% of purchases above R10 million, around 25% in the R5 to R10 million range and approximately 15% in the R3 to R5 million bracket,' says Smee. 'Compared to global cities, the Western Cape offers strong value. For instance, the average price of a home in one of the region's upmarket suburbs sells for around R10 million. To purchase an apartment in London, with considerably less living space, homebuyers will pay upwards of R12 million.' This sentiment is echoed internationally. The Australian Property Investor recently reported that South Africans pay around R17,000 per square metre for a median-priced home, compared to R113,000 in Australia. While Cape Town remains a prime property hotspot, buyers are expanding their search. 'The Western Cape's so-called 'Zoom' towns – so-called for their remote working appeal – include Pringle Bay, Betty's Bay, Kleinmond, Malmesbury, Hermanus, and Gansbaai,' says Smee. 'These areas provide easier entry points for buyers and remain within comfortable reach of Cape Town.' Beyond the Western Cape, other provinces offer compelling options. 'Mpumalanga, for instance, is currently leading the pack when it comes to home loan applications from first-time buyers [ooba Home Loans]. Nelspruit, in particular, is booming with new estate developments that offer a secure, lock-up-and-go lifestyle, community atmosphere, and budget-friendly pricing.' Gauteng continues to draw buyers seeking well-established infrastructure. 'Popular nodes like Waterfall, Bryanston, and Hyde Park are drawing interest from buyers seeking well-established infrastructure and upscale living,' Smee adds. KwaZulu-Natal's North Coast has emerged as an investment beacon. 'Over the past decade, this region has experienced massive growth, with estate developments, excellent schools, security, and community-driven living making it an increasingly worthwhile investment.' The Eastern Cape is also gaining ground, with towns like Jeffreys Bay and Kenton-on-Sea growing in popularity among short-term rental investors. 'These regions combine access to economic centres with a strong lifestyle appeal, without the Cape Town price tag,' Smee explains. 'For buyers willing to expand their horizons beyond the Western Cape, there are standout opportunities, many in secure estates or fast-growing nodes. And with many of these areas doubling as holiday destinations, they open the door to 'rentvestment' opportunities, whether for short-term letting or longer-term leasing.' Smee advises that while buying in the Western Cape might require more strategy and patience, the long-term rewards make it worthwhile. 'For homebuyers determined to get a foothold in the Western Cape property market, there are many options available. This investment is well worth it too as the average growth of property in the province is around 7.4%.' Top tips include: Enter into a joint home loan : Co-buying with a friend, partner or sibling can boost affordability and borrowing power. Save smart and plan long-term : Set clear savings goals and budget realistically for transfer and attorney fees. Start on the outskirts : Neighbourhoods just outside key metro areas often offer more accessible prices and are poised for growth. Buy a fixer-upper : Properties in need of a bit of work can often be negotiated at lower prices and renovated over time. Buy-to-let as a stepping stone : Purchase an investment property in a growing node while renting where you live. 'The Western Cape is a great place to invest, but it could require a bit more creativity and long-term thinking for first-time homebuyers to make it work. Alternatively, if the Western Cape doesn't meet your criteria, regions like the Eastern Cape, KwaZulu-Natal, and Mpumalanga have potential. It's not about compromising your goals, but rather being strategic,' says Smee. PERSONAL FINANCE
The Citizen
20-05-2025
- Business
- The Citizen
Townhouse or standalone house? Here is what and where 30-year-olds are buying
First-time buyers opt for freehold homes as their primary residence, while sectional title homes are used as an investment or buy-to-let properties. First-time buyers, especially young adults, often opt for sectional title properties as their first homes because they are convenient. Sectional title properties are a form of ownership where a building or complex is divided into individual sections, like apartments, townhouses and common areas. However, data from Ooba Home Loans shows that interest from first-time buyers in buying freehold homes has not declined significantly. Freehold ownership means you own both the land and the building on it, giving you full control over the property. This includes the freedom to renovate, extend or modify the property, often with minimal restrictions beyond local zoning regulations. Andrew Golding, chief executive of the Pam Golding Property group, says the percentage of freehold homes purchased by first-time homebuyers has remained relatively stable, declining from 70% in 2014 to 66% in 2024. ALSO READ: Warning for South Africans buying homes Which home do you prefer? Freehold homes and sectional title properties have different benefits, and it depends on what the buyer is looking for. Golding adds that first-time buyers opt for freehold homes as their primary residence, while sectional title homes are used as an investment or buy-to-let properties. 'In 2014, there was a slight preference for freehold homes, 52% of first-time buyers' investment purchases, but by 2024, sectional title purchases dominated at 60% of all first-time buyers' investment purchases.' Which type of home is an investment? He adds that many first-time buyers are embracing the national trend towards acquiring investment properties or buy-to-let properties. 'Increasing demand from first-time buyers has resulted in a real (inflation-adjusted) increase in the average price paid by those purchasing their first property during the first four months of the year. 'During the first four months of 2025, the national purchase price for homes in South Africa averaged R1.66 million, reflecting an increase of 2.7% compared to the same period last year. 'Notably, during the same four-month period this year, the average price paid by first-time buyers was R1.245 million, which shows an increase of +4.7% compared to year-earlier levels.' Difference in home prices Golding says that in 2014, a first-time buyer purchasing an investment property paid almost the same for that property, regardless of whether it was a freehold home (R1.045 million) or a sectional title (R1.026 million). First-time buyers who opted for freehold homes purchased the more expensive ones, with the average price paid increasing by 111% over the past decade to an average of R2.21 million in 2024. This compares to an increase of just 42.1% over the same period, with an average purchase price of R1.46 million in 2024 for first-time buyers' sectional title purchases bought as investment or buy-to-let properties. ALSO READ: Thinking of buying your first home, here are five key issues to consider Decline in buying with a spouse Data shows a decline, from 34% in 2014 to 27% in 2024, in the percentage of people buying houses with a spouse. However, purchasing with another person has risen from 14% to 18% – perhaps reflecting those buying a home with a partner, family member or friend instead of a spouse. Golding adds that 64% of their first-time buyers do not have dependents. 'However, there has been a clear increase in those without dependents in the wake of the pandemic, even as the average age of first-time buyers has risen.' Ages of first-time buyers He adds that there has been a shift in first-time buyers; those over the age of 43 are the fastest-growing age cohort of first-time buyers, compared to those between 24 and 33 years old. Nonetheless, the largest age group is between 33 and 43, with a more recent average age of 35. 'Regionally, Ooba Home Loans' statistics revealed that during the year-to-date, demand from first-time buyers was strongest in Mpumalanga (57.3%), followed closely by the Free State (55.9%). 'Gauteng South & East (51.4%) and KwaZulu-Natal (51.2%) were the only other regions in which first-time buyers accounted for more than half of all their applications for home loan finance.' ALSO READ: More South Africans buying houses for less than R700k. Here's why Pros of buying sectional title property According to Betterbond, there are pros and cons of buying sectional title property. Pros include: Easier to finance: Before construction commences, developments must be approved by the major banks, so when you then apply for a bond, the process is often quicker and easier. Body corporate : As the owner of a sectional title unit, you automatically become a member of the body corporate, the legal entity that manages common areas of the property. You pay a monthly levy for a range of services, including conduct rules for residents, building insurance, perimeter security, cleaning, landscaping, and maintenance of common areas, such as gardens. As the owner of a sectional title unit, you automatically become a member of the body corporate, the legal entity that manages common areas of the property. You pay a monthly levy for a range of services, including conduct rules for residents, building insurance, perimeter security, cleaning, landscaping, and maintenance of common areas, such as gardens. Security: Sectional title property generally offers good entrance and perimeter security. In a freestanding house, you are responsible for installing and maintaining these systems. However, in a sectional title property, the body corporate takes care of it, and the cost is funded through your monthly levy. Running costs: You pay for municipal rates and taxes, home contents insurance, upkeep of your garden if your unit has such an area, and your own monthly water and electricity consumption. Everything else is pretty much taken care of. Rentals and resales: Sectional title properties are popular with renters, making them a good option for investors. This also links to resale value, which often improves over time. Connectivity: Sectional title properties are usually fibre-enabled, so your only expense would be connecting to the existing infrastructure and paying for monthly usage. Working from home is becoming increasingly prevalent, which is a significant advantage. Cons of buying sectional title property Communal living : Sectional title property means living close to others, and this could come with a few everyday irritations, like noise. : Sectional title property means living close to others, and this could come with a few everyday irritations, like noise. Special levies: From time to time, in a sectional title property, there might be a special levy, for example, if the exterior of the building needs painting. However, owners will always be informed of this well in advance, so you will be able to budget for it in good time, and ultimately, it will increase the value of your investment. Benefits of buying freehold Nedbank listed a few benefits of buying a freehold home. You will usually have more space and privacy on a freehold property, with your neighbour's house further away than in a townhouse or block of flats. You will have more freedom in matters such as exterior decorating or choosing your preferred pets. You can also determine the level of maintenance and security required for the property, and allocate a budget for these services according to your own priorities. You can deal directly with the municipality regarding any service issues, instead of relying on the body corporate. NOW READ: House prices are rising in SA — here's why
