Young South Africans still value homeownership, despite market pressures

With growing attention on the country’s youth, some may be wondering whether the concept of property ownership is still accessible to this vital demographic today. The short answer is yes.

Although young people are entering the property market later than in previous years, data indicates that they still have a strong affinity for homeownership.

The latest data from Lightstone revealed that young adults (aged 20-35) accounted for 29.7% of all property transactions in 2024, down from 36% in 2019 and 41% 10 years ago. Notably, 69% of buyers in this age group were purchasing property for the first time.

Adding to this, Lightstone’s data highlighted homebuyers aged 36-50 as top contenders in the market, accounting for 43% of home purchases, with 42% of this age segment purchasing homes for the first time.

Ooba Home Loans’ data over the past decade (2014 to 2024) underpins this sentiment. A decade ago, applicants aged >24 to 33 accounted for the lion’s share of application volumes (39%). However, by 2024, this figure had dropped by 12%, highlighting the prevailing challenges of a tough economic climate.

In the age 33-43 and 43-plus brackets, we had, however, noticed heightened first-time homebuyer activity in 2024, with figures up by 4% and 10%, respectively, at 39% and 32%. Homebuyers aged 18 to 24 years account for the remaining 2%.

Factors Fueling the Lag

Factors such as the rising cost of living, reduced affordability, economic uncertainty, and high unemployment continue to impact the youth market.

Contributing to the current market dynamics are persistently high interest rates. Although rates have dropped by 100 basis points since September last year, we’re still operating in a high-interest rate environment. The surge of first-time homebuyers during the pandemic has since waned from 55.6% in May ‘20 to 45.3% in May ‘25.

Robust deposit values suggest this group may be delaying their purchases to save up for a larger deposit. In today’s climate, this segment of homebuyers understands the importance of paying down their home loan as quickly as possible, and while first-time homebuyers’ deposit values are trending lower, our Q1'25 data shows that they are still sitting at a healthy 9.6% (R120,366 on average).

Last year, first-time homebuyers placed greater emphasis on saving for deposits. That priority appears to have shifted, likely due to the current more favourable lending terms offered by banks.

Young First-Time Homebuyers Outspend the Rest

Interestingly, though, when these homebuyers do decide to enter the market, they are in fact spending more than any other first-time homebuyer in any other age category.

According to Lightstone, homebuyers aged 20 - 35 paid an average of R999,000 for a property, while retirees purchasing for the first time spent the least, averaging R730,000.

Furthermore, the data cited that while nearly 60% of young homebuyers bought a home for less than R1 million, a notable 17% bought homes between the ranges of R1 million and R1.5 million.

Homebuyers in this category are taking advantage of the adjusted property transfer duty exemption threshold (now at R1.21 million) and maybe ‘buying up’ by exercising their negotiation skills in a buyer’s market where there are good deals to be had.

When choosing where to spend, the majority of young homebuyers are drawn to Gauteng. Lightstone data shows that of the top 20 suburbs attracting young buyers, eight are in Johannesburg, four in Ekurhuleni, two in Lesedi, and one in Tshwane, compared to four in the City of Cape Town and just one in KwaZulu-Natal.

Finding Alternative Ways to Enter the Market

Delayed buying doesn’t necessarily mean a lack of interest. Research shows that young homebuyers view property as a sound investment, and our data indicates they’re finding alternative ways to make it happen.

While the majority of first-time buyers still purchase property as single applicants (55% in 2024), an increasing number are opting to buy jointly with a family member, partner, or friend, in a growing trend known as ‘houses before spouses’, which rose from 14% in 2014 to 18% in 2024.

The buy-to-let market remains buoyant too, recording a year-on-year increase of 0.5% to reach 12.9% in Q1'25. 

We’ve seen strong growth in the buy-to-let segment, particularly in the Western Cape, where many investors have opted for a ‘rentvesting’ strategy: buying properties to rent out while choosing to rent their own accommodation elsewhere.

Adding to this, ooba Home Loans 2024 data underpinned a 4% increase in the number of first-time homebuyers purchasing buy-to-let properties.

Bringing young homebuyers into the market remains a key priority. The younger generation values property ownership and sees it as a path to building generational wealth. Our steadfast commitment to making the dream of homeownership a reality for every South African is strongly supported by the banks, and we believe that, with the right tools and guidance, more young people will continue to find their footing on the property ladder.

* Dyer is the CEO of the ooba Group.

PERSONAL FINANCE

Interestingly, though, when these homebuyers do decide to enter the market, they are in fact spending more than any other first-time homebuyer in any other age category.

According to Lightstone, homebuyers aged 20 - 35 paid an average of R999,000 for a property, while retirees purchasing for the first time spent the least, averaging R730,000.

Furthermore, the data cited that while nearly 60% of young homebuyers bought a home for less than R1 million, a notable 17% bought homes between the ranges of R1 million and R1.5 million.

Homebuyers in this category are taking advantage of the adjusted property transfer duty exemption threshold (now at R1.21 million) and may be ‘buying up’ by exercising their negotiation skills in a buyer’s market where there are good deals to be had.

When choosing where to spend, the majority of young homebuyers are drawn to Gauteng. Lightstone data shows that of the top 20 suburbs attracting young buyers, eight are in Johannesburg, four in Ekurhuleni, two in Lesedi, and one in Tshwane, compared to four in the City of Cape Town and just one in KwaZulu-Natal.

Finding Alternative Ways to Enter the Market

Delayed buying doesn’t necessarily mean a lack of interest. Research shows that young homebuyers view property as a sound investment, and our data indicates they’re finding alternative ways to make it happen.

While the majority of first-time buyers still purchase property as single applicants (55% in 2024), an increasing number are opting to buy jointly with a family member, partner or friend – in a growing trend known as ‘houses before spouses’, which rose from 14% in 2014 to 18% in 2024.

The buy-to-let market remains buoyant too, recording a year-on-year increase of 0.5% to reach 12.9% in Q1'25. 

We’ve seen strong growth in the buy-to-let segment, particularly in the Western Cape, where many investors have opted for a ‘rentvesting’ strategy: buying properties to rent out while choosing to rent their own accommodation elsewhere.

Adding to this, ooba Home Loans 2024 data underpinned a 4% increase in the number of first-time homebuyers purchasing buy-to-let properties.

Bringing young homebuyers into the market remains a key priority. The younger generation values property ownership and sees it as a path to building generational wealth. Our steadfast commitment to making the dream of homeownership a reality for every South African is strongly supported by the banks, and we believe that, with the right tools and guidance, more young people will continue to find their footing on the property ladder.

* Dyer is the CEO of the ooba Group.

PERSONAL FINANCE