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Friday Jan 19, 2018

Large decline in Cape Town first-time home-buyers

Estimated first-time home-buying levels in Cape Town, expressed as a percentage of total home-buyers in the city, slumped to 7.5% last year. This was the most severe decline in first-time home-buying levels in the country.

Average first-time home-buying levels in Cape Town have now been below the national average for nine consecutive years as strong house-price growth in the region dented affordability, according to FNB.

John Loos, a household and property sector strategist at FNB Home Loans, said yesterday that estimated national average first-time home-buying stabilised at 20.27% of total home-buying last year, which was virtually unchanged from the average 20% level in 2016 after declining in the previous two years.

"A stable interest rate environment in 2018 could see this (national) percentage moving more or less sideways again, or even slightly upwards should interest rates decline further," he said.

Loos said first-time home-buying levels in the city had diverged far more significantly from the national average since 2016 after it dropped from 18.39% in 2015 to 12.8% in 2016, and to 7.5% last year.

The first-time home-buying level in the city reached a multi-year peak of 21.25% in 2012, while nationally it peaked at 26.5% in 2014.

Loos said it would appear that strong house-price growth in the city in recent years had resulted in a significant deterioration in affordability. "We believe that a sharp decline in its estimated first-time home-buying percentage is strongly reflective of this affordability deterioration."

Business
Cape Argus

    
 

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