Bottom-end buying now main market driver
News > news - 02 Sep 2011
“Our figures show that over the past year, more than half (52%) of all bonds granted have been for less than R500 000,” says Betterbond CEO Rudi Botha, “with 42% occurring in the R250 000 to R500 000 bracket. And allowing for an average 15% deposit, this means that most home purchases at the moment are being made for less than R600 000.”

A further 33% of bonds granted, he notes, were in the R500 000 to R1m range, leaving only 14% that were granted for more than R1m.

What is more, Botha says, it is not only first-time buyers that are active in the under-R600 000 market. “Indeed, first-time buyers currently account for only 16% of the bonds being granted through Betterbond, and some of these are actually for more than R500 000.

Some of the remaining bonds for less than R500 000 are of course “further advances” being made to existing homeowners who are tapping into the equity built up in homes that increased in value during the boom years, but the majority are going to second or third-time buyers and to investors, he says.

“What we are observing is a fairly large trend among those buying for the second or third time towards downscaling, or moving from bigger properties that are more costly to maintain and secure to smaller homes that are both cheaper to purchase and cheaper to run.

“This ties into growing consumer concerns about rising electricity tariffs, municipal rates, transport and food costs, and reflects the desire of many homeowners to reduce their overall debt load, not only their monthly bond repayments.”

Meanwhile, Botha says, buy-to-let investment is also on the rise once more, albeit relatively slowly, as it becomes increasingly obvious that stricter lending conditions are here to stay, and that the demand for rental properties is set to rise as a result, particularly at the lower end of the market.
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