Despite rising deposit requirements and conservative lending practices, aspiring homeowners can still navigate the property market with careful planning and expert guidance.
While lower interest rates in recent months have improved affordability for many buyers, banks' requirements for larger deposits are creating a new hurdle for those hoping to enter the property market.
Banks have become increasingly cautious amid ongoing economic uncertainty and inflationary pressures. While deposit requirements did not rise significantly in May, the average deposit required from buyers in the second quarter of this year was 21% higher than a year ago.
At the same time, rising house prices are putting additional pressure on aspiring homeowners. BetterBond's June Property Brief reports year-on-year house price growth of 8.6% for all buyers and 9% for first-time buyers – well above inflation. In May, the average home price for all buyers remained above R1.7 million, while the average purchase price for first-time buyers was R1.4 million.
The upward trend in deposit requirements widens the gap between those who are ready to buy and those who remain on the sidelines while building up sufficient savings. Fortunately, the impact of higher deposit requirements has been less severe for first-time buyers, whose average deposit requirements increased by only 7.3% year-on-year.
