Johannesburg - FNB's Estate Agent Survey has found that an
increasing number of first time buyers are able to produce the money required
for deposits and transfer fees, leading them to become a more significant
source of residential demand in 2011.
John Loos, household and property strategist at FNB Home
Loans said that the survey showed the changing behaviour that was beginning to
happen in the household sector.
First time buyers had become far less significant in the
home buying market around recession time, dropping to an estimated 15% of total
home buyers by 2008, according to the sample of agents surveyed at the time.
However, according to FNB, the past three years have seen
consecutive increases in the first time buying percentage, with a very
significant jump from 17% in 2010 to 23% in 2011. This was the highest first
time buying percentage since 2005. However, one should bear in mind that
overall home buying volumes were far lower compared with 2005/6, so this
percentage still represented a far lower overall number of first time buyers
compared to then.
Nevertheless, the percentage improvement over the past 3
years was partly reflective of improved first time home buyer confidence.
Confidence alone was an important factor in driving first time buyer demand.
Unlike established households, for whom having a home was
often a more urgent and pressing matter, many young first time buyers have had
the flexibility of remaining in the rental market until such time as economic
or interest rate conditions improved, or alternatively postponing their
departure from their parents' home.
It should therefore not be too surprising that the recovery
in the first time buying percentage lagged the overall market recovery
somewhat, with a portion probably choosing to adopt a "wait-and-see
approach, but were now (rightly or wrongly) more encouraged as the memory of
recession and high interest rates fades.
In addition, it was true that banks had relaxed their credit
criteria gradually and mildly since 2008, which was crucial for first time
buyers in a country which has an extremely low savings rate that makes deposit
requirements troublesome for many.
Loos did point out however, that FNB believed household
saving would improve noticeably in 2012, and indeed in the housing market some
agents were already starting to see signs that this was happening. Higher
savings rates were a far more desirable solution to the home loan deposit
constraint than merely relying on banks to relax credit criteria.