FTBs 'struggle' in South Africa

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FTBS 'STRUGGLE' IN SOUTH AFRICA

Tuesday, 14 Aug 2007

South African first-time buyers (FTBs) are struggling to make their first step onto the property ladder, a new report states.

The First National Bank residential barometer briefing, released on Monday, states that FTBs are increasingly finding it a struggle because they are being hit by affordability constraints.

In the middle of 2005, FTBs accounted for 32 per cent of all house sales - but this proportion stood at a comparatively paltry 16 per cent in the second quarter of this year, the study states.

"The combination of the National Credit Act (NCA) and recent interest rate hikes has curtailed activity in this segment of the market, due to stringent affordability assessments and qualifying criteria," a briefing statement read.

Real estate professionals say that the lack of availability of affordable credit is acting as a barrier at the lower end of the market.

"Sixty-seven per cent [of real estate professionals] claim qualification and affordability issues are becoming significant hurdles for this market to secure funding," the report states.

"However, industry professionals operating in the upper end of the market affirm that their customers are more immune to the effects of the NCA, largely due to the proportion of cash buyers in this market."

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