6 / 56
July 2016
News
A
ccording to Shaun Rademeyer,
CEO of BetterLife Home Loans,
the country’s largest mortgage
originator, banks are applying strict
affordability criteria in terms of the
National Credit Act, and this has re-
sulted inmost buyers requiring a big-
ger deposit than they did a year ago.
Rademeyer says, “The main rea-
son for this change is the steady rise
in interest rates since July last year,
which has pushed up the monthly
repayments on all kinds of debt. This
combinedwith rising inflationhas put
many household budgets under pres-
Banks raise home loan deposits
The slowing economy has not yet caused a decline in the percentage
of home loans applications being approved by banks, but banks have
started raising deposit requirements in recent months.
Purchase price
Average deposit Maximum%of purchaseprice
R0 to R250 000
R17 205
-
R250 00 to R500 000
R30 638
12,3%
R500 00 to R1m
R93 371
18,7%
R1m to R1,5m
R222 353
22,2%
sure and negatively affected housing
affordability.”
He points out that once house-
holders have paid all their monthly
bills many people just don’t have
enough disposable income left to
comfortably afford a bond repay-
ment. In these circumstances, the
banks have no choice but to restrict
the size of loans.
What is more, he says, given
mounting pressures on the country’s
lending institutions to lower their
risks and increase their reserves,
it is not expected that the trend of
increasing deposit requirements will
change for some time.
“First-time buyers may find it eas-
ier to prioritise debt repayments and
savings to enable themto buy. Better-
Life Home Loans statistics show that
in May the average first-time buyer
house price was R724 000, and the
average percentage of purchase price
required was just R86 000 or 12% of
the purchase price.
Consequently, says Rademeyer,
first-time purchases as a percentage
of the total are not expected to fall
far from the current 46% level in the
coming months. “We do, however,
foresee that the average home price
may stall and even decline as the
higher deposit requirements at the
top end of the market cause many
repeat buyers not to upgrade but to
downsize and opt for smaller and less
expensive homes.”
The BetterLife Home Loans statis-
tics represent 25% of all residential
mortgage bonds being registered in
the Deeds Office.
■
R
awson Property GroupManag-
ing Director, Tony Clarke says,
“This generation of millenial
buyers – currently in its 20s and early
30s – has very different ideas about
what makes a perfect home com-
pared to previous generations such
as Baby Boomers and Generation X
buyers.”
A major study by global research
company Nielsen, in 2014, found
that 62% of Millennials would prefer
to live in mixed-use, live-work-play
communities, in an urban centre
where they can walk to work, shops
and restaurants.
“Indeed, the survey revealed that
Millennials are currently already liv-
ing in urban areas at a higher rate
than any other previous generation.
Almost 40%of themare not planning
to leave the city and relocate to the
Millennials – the next wave of homebuyers
Millennials are the next big group of homebuyers and it’s important
that the residential market understands where and how these young
people prefer to live.
suburbs in the future,” says Clarke.
But, while they may not be keen
on the suburbs, a large number of
Millennials like the idea of living
in small country towns – provided
everything they need is within walk-
ing distance and there is cell phone
and internet connectivity.
It is not surprising that most of
these busy people prefer smaller
homes that require less upkeep.
“What is interesting is that they
generally don’t like cookie-cutter
apartments, townhouses, or clusters
that all have the same floorplan.
Millennials lead technology-driven
lives and expect green features such
as additional insulation, energy-
efficient windows, solar panels and
rain tanks.”
When it comes to the floorplan,
several construction surveys show
that Millennial buyers prefer homes
with an open layout for entertain-
ing and outdoor spaces like patios,
decks and balconies to extend their
living areas. “And finally, the research
shows that they generally prefer
neutral colours and clean architec-
tural lines that won’t date, lots of
light and durable, unfussy finishes,”
concludes Clarke.
■
Shaun Rademeyer