Free State becoming a haven for first-time buyers – here’s why

Bloemfontein is attracting high volumes of young, first-time buyers. Picture: South African Tourism/WikiMedia Commons

Bloemfontein is attracting high volumes of young, first-time buyers. Picture: South African Tourism/WikiMedia Commons

Published May 11, 2023


Even though the Western Cape is the province most people are looking to buy homes, an unlikely three are continuing a silent but steady upward trajectory in the background when it comes to first-time buyers.

In fact, Rhys Dyer, chief executive of ooba Home Loans, says the Free State, Mpumalanga, and Limpopo “lead the way” in this buyer segment.

This is largely due to the provinces’ affordability, value for money, and the lure of people moving back to their home towns to start families.

Read our latest Property360 digital magazine below

During the first three months of the year, he says the Free State came out on top with 71.4% of all ooba’s home loan applications in the area being from first-time buyers. This was followed by Mpumalanga with 59.4% of applications in that area being from new buyers.

“While affordability continues to dwindle amongst rates-sensitive first-time home buyers, we are seeing healthy levels of activity in this market sector in the Free State. In March alone, 67% of the total home loan applications received for the region was from first-time home buyers.”

Dyer says demand in the Free State can be largely attributed to the region’s capital, Bloemfontein, which has “enjoyed a healthy increase in total sales over the past few years”.

“Notably, the city registered its highest peaks over the past decade in 2021 and 2022, at 3 492 and 3 295 units respectively (sales of both freehold and sectional title units according to Lightstone).”

Lightstone also reports that 522 sectional title units and 282 freehold homes have been sold in Bloemfontein this year alone.

“From April 2022 to March 2023, nearly one-third of all home buyers in Bloemfontein were classed as young adults – 18 to 35 years – as per Lightstone. We also speculate that the high volume of applications for sectional title properties can be attributed to this segment.”

Mpumalanga, however, remains a strong contender for property investors as it continues to outpace in terms of property price performance and buy-to-let demand.

“Regardless of the climate, we are seeing brilliant results coming out of this tourism hotspot with particular focus on Mbombela (formerly Nelspruit) as the much-trafficked corridor between Pretoria and Maputo in Mozambique.”

As a gateway to the Kruger Park, Dyer says Mpumalanga also presents an excellent investment opportunity and has enjoyed heightened demand for investment/rental properties. Mbombela is enticing first-time home buyers as new developments continue to pop up.

Meanwhile, Limpopo has enjoyed an average purchase price jump of 7.4% in less than a year, with the average price being R1.5 million as of March 2023, he says. The price of properties for first-time buyers has also seen a sharp uptick in a short time, rising from R918 500 in July 2022 to R1.295m in March.

“This means that the average first-time buyer price in Limpopo is now higher than the national average purchase price, a good indicator of property confidence in the outlying regions.

“Some of the demand can be attributed to the small town of Hoedspruit which has experienced notable momentum in the price of freehold homes and vacant land between 2020 and 2023...Agriculture and mining are key economic contributors in Hoedspruit but what really sets it apart for semigrants is the care-free lifestyle.”

Generally, throughout the country, millennials are increasingly heading to the property market, say agents from the Seeff Property Group. Data from Lightstone confirms that this buyer demographic now comprises upwards of 30% to 42% of all property purchasers, especially in the main urban areas.

The millennial buyer market is predominantly below R1.5 million and they usually fall in the under-35-year age bracket. While affordability is a key driver, graduates with professional jobs tend to spend up to R2.5 million, especially married couples, agents say.

Lightstone statistics show that the highest volume of millennial buyers tends to be in Gauteng which still offers significant affordability. Young buyers can still find excellent value in areas such as Randburg where up to 39% of buyers are younger than 35.

Samuel Seeff, chairman of the Seeff Property Group, says millennials view South African property as a good investment, and that this was clearly evident from the “tremendous boost in sales” to the under-35-year demographic during the Covid-boom when the interest rate was so low.

Buying property at a young age is one of the smartest decisions a person can make, says Richard Gray, chief executive of Harcourts South Africa.

“Not only does it provide a sense of security and stability, but it also allows for long-term financial benefits."

South Africans should start investing in property “as early as possible”, he says, adding that now is the “perfect time” for millennials to take advantage of the real estate market and secure their future.

Those who are able to invest in property when they are young have the opportunity to build wealth through property appreciation and rental income. Owning a property also provides a valuable asset that can be leveraged for other investments and financial goals.

In addition to financial benefits, Gray also emphasises the personal benefits of owning a property.

"It's not just about the money, it's also about having a place to call your own and creating a home for yourself. Homeownership provides a sense of pride and accomplishment that cannot be replicated."

Data from ooba shows that the average age of the first-time buyer for the first quarter of 2023 was 35. The average purchase price was R1.136 million, an increase of 0.4% from the price during the same period last year.