Majority of first-time buyers still purchase freehold homes

While the conventional perception is that first-time homebuyers typically prefer sectional title properties, over the past decade the vast majority of homes purchased by this sector as their primary residence has been freehold homes, says Dr Andrew Golding, chief executive of the Pam Golding Property group.

 

During this period, according to data from ooba Home Loans, the percentage of freehold homes purchased by first-time homebuyers has barely shifted, declining from 70% in 2014 to 66% in 2024.

 

Source: ooba Home Loans

 

Says Dr Golding: “Conversely, however, while first-time buyers (FTBs) may opt for freehold homes for their primary residence , there has been a clear shift towards sectional title homes as investment or buy-to-let properties . In 2014 there was a slight preference for freehold homes (52% of FTB investment purchases) but by 2024, sectional title purchases dominated at 60% of all FTB investment purchases.

 

Source: ooba Home Loans

 

“Positively, FTBs are also embracing the national trend towards the acquisition of investment/buy-to-let properties, with the percentage of FTB purchases of total mortgage applications from this segment received by ooba Home Loans rising from just 4% in 2014 to an average of 10% in 2024.  This compares to the national average demand for investment properties which account for 12.75% of all mortgage applications received by ooba Home Loans during the first four months of the year.

 

Source: ooba Home Loans

 

“Increasing demand from first-time buyers has resulted in a real (inflation adjusted) increase in the average price paid by those purchasing their first property during the first four months of the year. During the first four months of 2025, the national purchase price by home buyers in South Africa averaged R1.66 million, which reflects an increase of +2.7% compared to the same period last year. Notably, during the same four-month period this year, the average price paid by  first-time buyers  was R1.245 million, which shows an increase of +4.7% compared to year-earlier levels.”

 

Dr Golding says that in 2014, a first-time buyer purchasing an investment property paid much the same for that property regardless of whether it was a freehold home (R1.045 million) or sectional title (R1.026 million). While the percentage of FTBs acquiring an investment property opting to purchase a freehold home declined, those who did so bought more expensive homes – with the average price paid rising by 111% over the course of the past decade to an average of R2.21 million in 2024.  This compares to an increase of just 42.1% over the same period to an average purchase price of just R1.46 million this last year (2024) for FTB sectional title purchases bought as investment / buy-to-let properties.

 

“Interestingly, a slight majority of FTBs purchase their properties alone, a statistic which has not changed much over the past decade (52% in 2014 and 55% in 2024). Possibly due to people delaying marriage, there has been a slight decrease in the percentage purchasing with a spouse, declining from 34% in 2014 to 27% in 2024. However, purchasing with another person has risen from 14% to 18% – perhaps reflecting those buying a home with a partner, family member or friend instead of a spouse.

 

Source: ooba Home Loans

 

“Unsurprisingly, a slight majority (64%) of FTBs do not have dependents. However, there has been a clear increase in those without dependents in the wake of the pandemic, even as the average age of first-time buyers has risen. The lower percentage of FTBs with dependents perhaps also reflects the decline in FTBs purchasing a home with a spouse, as young adults delay marriage and/or parenthood.”

 

SOURCE: ooba Home Loans

 

Concludes Dr Golding: “The age of first-time buyers has increased steadily over the past decade, with a clear inflection point when interest rates were cut aggressively during the pandemic. While one may have expected the lower rates to have significantly boosted the number of younger people purchasing a home, it actually appears that it allowed many older FTBs into the market. The main shift was away from >24 to 33 years to those over the age of 43 years – the latter category is now the fastest growing age cohort of first-time buyers. Nonetheless, the largest age group is >33 to 43 years with a more recent average age of 35 years.”

 

 

Source: ooba Home Loans

 

Regionally, ooba Home Loans’ statistics revealed that during the year-to-date demand from first-time buyers was strongest in Mpumalanga (57.3%) – followed closely by the Free State (55.9%). Gauteng South & East (51.4%) and KwaZulu-Natal (51.2%) were the only other regions in which FTBs accounted for more than half of all their applications for home loan finance.