Gez Z buyers get money to buy property from a number of sources. Picture: RDNE Stock Project/Pexels
Young South Africans who are working overseas or on yachts are using their foreign currency earnings to buy properties back home.
Michael Bester, director at Tyson Properties Atlantic Seaboard has recently sold three properties to such buyers, who are aged between 21 and 24.
The prices of these homes, which are located in Sea Point, Hout Bay, and the Cape Town CBD, range from R1.6m to R3.2m.
Gen Zers, or Zoomers, as they are called, are “taking advantage” of the Euro/Rand exchange rates abroad, as well as the “excellent earning capacity on the yachts”, he says.
For many young buyers who are not earning foreign currencies, Francois du Toit, director at Tyson Properties Johannesburg, says they are purchasing homes with “some assistance” from parents or loved ones.
“These individuals are often young professionals or graduates that are employed in the major economic hubs, and being close to the workplace becomes crucial. The classic transaction would often be when the younger buyer qualifies for the home loan and then get assistance from relatives to assist with the bond costs and transfer fees.”
While these fees are traditionally not covered by financial institutions, du Toit says changes over the past 18 months have seen “really good benefits for first-time homeowners becoming more and more available”.
This said, he adds that there are, generally, “very few buyers” in South Africa who are under the age of 24.
“Just prior to the pandemic, one of our major bond origination companies stated that the average first-time home owner’s age was around 35. I do believe that the average age has come down to some degree, however it is still early 30s rather than below 25 years of age.”
Lightstone data backs this up, revealing that this year, so far, has yielded the lowest number of buyers under the age of 25 since 2018. Although we are only half way through 2023, this could also be a sign of affordability struggles among younger buyers.
As of today (June 14), a total of 2 377 buyers aged 25 and younger have become homeowners this year. This figure is compared to:
Of all this year’s young buyers so far, most (1 035) have purchased homes priced from R500 000 to R1m. This is followed by 799 purchases in the R1m to R3m price band and 485 in the R250 000 to R500 000 band. A total of 58 Gen Zers bought homes valued higher than R3m.
Lightstone’s statistics show that, of the 63 341 homebuyers this year, those under the age of 25 account for 3.75%. Buyers aged 26 to 35 make up 29.5% (18 717) of purchasers. This means that, buyers under the age of 35 form the second highest age group of buyers, with a total of 21 094 (33.3% or one-third) of all buyers.
When it comes to the suburbs that are most popular with buyers under the age of 25, the data reveals these to be the Top 10:
Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty says the youngest buyers, especially those who are single, generally want to live in – or very near –cities, and be near the action and/or work. They are looking for affordable, low-maintenance lock-up-and-go sectional title properties which offer easy access to all the amenities and to work.
“Walkability is important to these buyers and they prefer mixed use areas where they can walk to shops, restaurants etcetera.... Most are happy to compromise on space for the right location.”
She notes that developers are now also meeting this demand.
“Increasingly, we are seeing parents helping their children get a foot on the property ladder as affordability is an issue for these young buyers. Others are taking in flatmates to help pay the bond.”
These buyers, Geffen adds, are also contributing to the rise of ‘middle neighbourhoods’. These are typically areas where the housing is generally still affordable and the quality of life is good enough that new homeowners are willing take the risk of buying into the neighbourhood even though they can’t be sure if its trajectory will be up or down, over time.
In addition to young buyers opting for investment apartments with high short term letting potential via Airbnb, du Toit says the current Gen Zers looking at small lock-up and go units between 80-square-metres and 100-square metres.
“Flexibility and keeping their options open is important to this group.”
He adds: “Over the last two years, these buyers would often see their purchase as their entry/investment into the property market. Of course, life happens and other job opportunities in other cities or abroad meant that they would want to keep their investment and use it as an income generating asset. The current digital short-term rental options like Airbnb and Bookings.com provide really good opportunities for these savvy young individuals to generate income from their properties and have it ‘wash its own face’ so to speak with the costs covered by rentals.”
When South Africans younger than 25 make property purchases, David Jacobs, regional sales manager for the Rawson Property Group, says they usually pay for them with funds received through savings, inheritance, family trusts, investment maturation, or capital from their own thriving
He agrees that compact and affordable spaces are “most important” to this age group, and so sectional title spaces, from bachelor pads to one- or two-bedroom apartments are the property types they go for.
“Comfortable work-from-home spaces are important, even if the space has just a study nook with great connectivity.”
In addition to these young buyers seeking areas that offer good transportation systems and amenities, they also look for those that are close to gyms, good cafes, and restaurants where they can choose to work from and always have good connectivity.
David Gray, chief executive of Harcourts SA, adds that they often prefer homes with open floor plans that allow for customisation, multi-purpose rooms that can serve various functions, and smart home features that offer convenience and control.
“Young buyers often prefer properties with modern finishes, updated kitchens, stylish bathrooms, and overall contemporary aesthetics that are move-in ready. Low maintenance is an important element. With their busy lifestyles they often prefer properties that require minimal upkeep.”
Furthermore, they are increasingly prioritising sustainable features and eco-friendly practices.
“They may seek properties with energy-efficient appliances, solar panels, green spaces, and proximity to public transportation to reduce their environmental impacts,” he says, adding that those located in developments with shared amenities like fitness centres, swimming pools, parks, and communal spaces, are also attractive.
When it comes to affordability, they also make use of government initiatives like Flisp, or opt for shared ownership or co-buying arrangements.
“They purchase a property jointly with a partner, friend, or family member, which helps to distribute costs and financial responsibilities, making homeownership more feasible,” Gray says.