Bridging the gap: essential insights on property ownership for young black South Africans

Many younger black South Africans were unable to learn about property ownership from their parents, as it had not been a legal or practical option for previous generations.

The reality is that many segments of South African society have been historically disadvantaged when it comes to access to property ownership and understanding how it can be used to build generational wealth, says Stefan Botha, the Director at Rainmaker Marketing, in response to an enquiry from "Independent Media Property".

As an example, he said black South Africans were officially allowed to own property throughout the country in 1991 with the repeal of the Land Act and the Group Areas Act. He said that consequently, property ownership was rarely, if ever, discussed around the dining room table.

“This remains a significant issue in South Africa. Many citizens have been denied the opportunity to fully understand the benefits and pathways to property ownership, and we must work to change that.

"One major consequence of this history is a widespread lack of understanding about good versus bad debt. As a result, many South Africans are heavily burdened by debt and have little disposable income, often due to acquiring short-term debt for cars and luxury goods.

"This puts both individuals and the broader economy at a disadvantage,” Botha said.

Last week, "Independent Media Property" reported that many young people do not understand the mechanics of buying or investing in property or how to plan financially for long-term ownership. 

Tsekiso Machike, spokesperson to the Minister of Human Settlements (DHS) Thembi Simelane, said the country must enhance financial literacy and property education, "therefore, incorporate property and financial literacy into high school and tertiary curricula".

Machike said the country must also encourage entrepreneurship in real estate.

“Youth entrepreneurs in real estate are underrepresented but can unlock job creation and innovation in the sector.” 

The department said youth representation in South Africa's homeownership and property sectors is currently limited, adding that there is a noticeable shift towards investment-focused property purchases.

“Economic challenges remain a significant hurdle, but initiatives and advocacy efforts are emerging to support and empower young individuals in these sectors.” 

The ministry, which facilitates the creation of sustainable human settlements and improved quality of household life, said there is also a need to improve access to financing; promote First Home Finance to be more accessible, better publicised and easier to navigate for the youth, since many youths are excluded from traditional lending due to low or irregular incomes, lack of credit history or student debt. 

The property and lifestyle marketing agency said that a key aspect of this problem is that people often over-extend themselves financially by taking on the wrong kinds of debt, which leads to poor credit records. It said this creates a vicious cycle, making it even harder for individuals to enter the property market. There is also a critical need for greater education around improving and rebuilding credit scores and financial histories. This kind of knowledge is essential to helping more South Africans qualify for property financing in the future, it added. 

Botha, an experienced property expert, said he believes the responsibility lies with both the private sector and the public sector in working together to drive meaningful change in the local property and economic sector.

He said from a private sector perspective, education around property ownership is absolutely critical.

“It starts with helping people understand the basics of property ownership - how debt can be acquired, how it works and how it can be used as a tool to build long-term wealth through property.”

He said that from a public sector perspective, there needs to be a more unified and coordinated approach to promoting property ownership across South Africa.

“In my view, the government can play a much greater role in supporting and funding initiatives that provide property education and access, ensuring these efforts are rolled out nationally and reach all market segments.”

South Africa’s slow economic growth, rising cost of living and frequent fiscal shocks have prompted consumers across age groups to rethink how they manage cash flow and prepare for the unexpected.

“In an uncertain environment, consumers are turning to tools that give them back a sense of control and predictability,” says Colin Campbell, Director of Marketing and Operations at digital financial services provider Finchoice.

“The data supports this shift in behaviour, with our customers logging into the app twice a month on average to manage and track their finances,” he says.

However, not all credit is created equal - and in a climate where debt levels and unregulated lenders are on the rise, digital credit providers must do more than offer convenience.

“This is where responsible platforms are setting themselves apart,” says Campbell.

“Through smart use of data, thorough vetting processes and built-in affordability checks, we can use technology to enable access while actively protecting consumers across the generational spectrum.”

Machike said if South Africa's youth remains largely excluded from homeownership, property development and property investment, the impacts will be far-reaching, undermining not just the property sector, but also the broader economic and social development goals of the country.

He said this will also result in a shrinking future market for local property, as the current property-owning population ages, demand will decline if the youth do not replace them as buyers and investors. 

Machike added that the long-term health of the real estate market depends on consistent generational participation, without which an ageing market with reduced liquidity and long-term stagnation will result. 

He added that property is a major tool for intergenerational wealth creation, and if the youth does not participate in the purchasing of homes or invest early, they will miss out on capital gains, equity building and passive rental income.

Machike said this would subsequently entrench economic inequality, leaving the youth more vulnerable to poverty, housing insecurity and financial instability.

Independent Media Property