Young South Africans are entering the housing market in far greater numbers than ever before. Statistics gathered by mortgage origination company, MortgageSA, over the past year indicate that property worth R2.5-million was collectively acquired by youth under the age of 18, and that the youngest property owner is just 10 years old.

Although it is probable that these young people have inherited properties through trusts and wills set up by older relatives, as SA citizens under the age of 18 are prohibited from purchasing property in their own right, it’s an indisputable fact that a growing proportion of South Africa’s youth are viewing property as an important investment, and many now have the earning power to enter the market early.

Saul Geffen, MD of MortgageSA, says his company defines the “youth” market as those buyers under the age of 32, with roughly a quarter of the bond applications facilitated by MortgageSA coming from this market segment. In addition to better access to mortgages, the lower interest rate environment and positive economic outlook have played a significant role in more young buyers entering the market. As a result, young people have woken up to the long-term value of property investment.

Banks bid for their business
“They are now more aware that not only are they able to qualify for a bond, but the banks will bid for their business,” says Geffen. “Owning a property is not just a lifestyle choice, but is one of the first steps to long-term wealth creation.”

Geffen says that 52 percent of young property owners in South Africa are currently between 22 and 28 years of age, while 47 percent are between 29 and 32 years old. Purchasers aged 21 or younger make up less than one percent of the market.

Gauteng most affluent
The average size of a bond among purchasers in the youth sector is R325 000. The buying patterns identified by MortgageSA also show that the country’s most affluent young purchasers are currently to be found in the north of Gauteng, where the average bond level for the youth market is over R400 000. Centurion, Pretoria and the Cape Peninsula are next in line, with bonds averaging between R340 000 and R370 000.

While the highest bond applications, in value terms, come from young buyers in the affluent northern suburbs of Gauteng and the southern suburbs of Cape Town, the youth of KwaZulu-Natal, across all age bands, take out a relatively bigger number of bonds.

Geffen says that young people in this coastal region appear to have a greater awareness of the need to get a foot on the property ladder, although the properties they purchase are usually lower in value than those in areas such as Gauteng.

Young people aged 18 to 21 have bonded property valued at over R11-million countrywide, and collectively the youth acquired R3-billion of property over the past year. While the figures for the youth sector are still relatively small in relation to South Africa’s total home loan industry, which reached the R100-billion mark last year, Geffen says these figures indicate an important emerging trend in the property industry that could lead to considerable growth in this sector.