Shift in South Africa’s property market

While most first-time homebuyers in South Africa still prefer freehold homes as their primary residence, there has been a marked shift toward sectional title properties for investment purposes.

Pam Golding Property Group CEO Dr Andrew Golding recently explained that the conventional perception is that first-time homebuyers prefer sectional title properties.

Over the past decade, though, the vast majority of homes purchased by this segment as their primary residence have been freehold homes.

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

“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,” Golding said.

In 2014, there was a slight preference for freehold homes, which made up 52% of FTB investment purchases. However, by 2024, sectional title purchases dominated, accounting for 60% of all FTB investment purchases.

“Positively, FTBs are also embracing the national trend towards the acquisition of investment/buy-to-let properties,” he added.

The percentage of FTB purchases of total mortgage applications from this segment received by ooba Home Loans rose from just 4% in 2014 to an average of 10% in 2024.

This compares to the national average demand for investment properties, accounting for 12.75% of all mortgage applications received by ooba Home Loans during the year’s first four months.

“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, reflecting an increase of 2.7% compared to 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,” Golding said.

Investment trends among first-time buyers

Golding explained that in 2014, a first-time buyer purchasing an investment property paid roughly the same, regardless of whether it was a freehold home (R1.05 million) or a sectional title (R1.03 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.

Over the past decade, the average price paid rose by 111% to R2.21 million in 2024. Conversely, FTB sectional title purchases bought as investment/buy-to-let properties only increased 42.1% over the same period.

In 2024, the average purchase price of these properties was just R1.46 million, around R750,000 below the average freehold homes.

Interestingly, Golding pointed out that a slight majority of FTBs purchase their properties alone, a statistic which has not changed much over the past decade, going from 52% in 2014 to 55% in 2024.

Possibly due to people delaying marriage, the percentage purchasing with a spouse has been slightly decreasing, 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,” Golding said.

Unsurprisingly, at 64%, most FTBs do not have dependents. However, there has been an apparent increase in those without dependents after 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,” he said.

Golding added that the age of FTBs has increased steadily over the past decade, with a clear inflexion 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,” he said.

“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, Golding noted that the largest age group was those aged >33 to 43, with a more recent average age of 35.