South Africans between the age of 36 to 49 years dominate the residential market
New data from Lightstone shows that people between the ages of 36 and 49-years-old are the largest cohort of home buyers.
The percentage of purchases by buyers aged 36 to 49 has risen from 37% in 2018 to 40% during the first half of 2024.
According to Ooba Home Loans, the average age of all buyers in South Africa currently is 39 years of age.
Older buyers
Research from Lightstone showed that older South Africans between the ages of 50-64 are also very active buyers and investors.
This group of home buyers account for a large percentage of sales across the residential property market nationally, rising from 21% in 2018 to 24% during the first half of 2024.
“This is logical, given that many of these purchasers have paid off their mortgages, with some also accumulating wealth in residential investments, while the younger generation from 18 to 35 years of age is generally faced with greater economic challenges and fewer financial resources, particularly first-time buyers seeking to gain a foothold in the property market,” Andrew Golding, Chief Executive Officer (CEO) of the Pam Golding Property said.
Data from Ooba noted the demand for bonds from first-time buyers has strengthened, having risen above 50% - to 51% in September 2024, for the first time since February 2023.
Golding noted that this is the third consecutive increase in demand from first-time buyers.
He added that an improved inflation outlook has led to banks becoming more supportive, and stressed that the prospect of further interest rate relief in the next 12-15 month will push up the appetite for home buying.
What is the cut-off age for securing a home loan?
Homeownership can be significantly impacted by age, as it affects your ability to secure a home loan, according to Adrian Goslett, the Chief Executive Officer (CEO) of RE/MAX of Southern Africa.
Goslett states that lenders often use retirement age as a guideline, meaning the closer you are to retirement, the shorter the loan period offered.
The real estate expert noted that banks factor in a possible reduction in income post-retirement.
“An ideal scenario for most banks is to ensure that the loan is fully repaid by the time the borrower turns 75, meaning that your last chance to secure a twenty-year loan is probably around the age of 55,” Goslett explained.
He said that younger buyers typically have the advantage of longer repayment terms, which makes their monthly repayment amounts slightly more manageable.
“In contrast, older buyers, especially those nearing retirement, may face shorter loan terms, for example, 10 years instead of 20 years due to the reduced earning window. This will push up the monthly repayments and can end up affecting how much they can qualify for in-home finance,” Goslett added.
You are not excluded if you are older
Goslett said that if you belong to an older age group - do not feel despondent - this doesn't mean older buyers are excluded from securing a home loan.
Banks could offer tailored solutions for older buyers. This may include a loan agreement that has shorter loan terms or may require a higher deposit. This will help mitigate the increased risk.
Goslett also added that older applicants with strong financial positions, such as substantial savings, and significant deposits can improve their chances of securing a bond with South African banks.
The best thing you can do is getting on the property market as soon a possible.
IOL BUSINESS