MAIN IMAGE: Rhys Dyer, CEO of ooba Home Loans
While the Western Cape remains in focus for its large contribution to home loan applications in the residential property sector, inland provinces such as the Free State, Mpumalanga, and Limpopo continue their silent but steady upward trajectory.
“These provinces lead the way in the first-time homebuyers segment – largely due to their affordability, value for money, and a trend in which young homebuyers move back to their hometown to start a family,” explains Rhys Dyer, CEO of ooba Home Loans.
Free State comes out on top for first-time homebuyers
Free State comes out on top for first-time homebuyer applications in Q1 of 2023 – sitting at 71.4% of the total applications received by ooba Home Loans in this province, followed by Mpumalanga at 59.4%.
“While affordability continues to dwindle amongst rates-sensitive first-time homebuyers, we are seeing healthy levels of activity in this market sector in the Free State. In March alone, 67% of the total home loan applications received for the region were from first-time homebuyers.”
Free State first-time homebuyer activity exceeds the rest. Source: ooba Home Loans.
According to Dyer, demand in the Free State can be largely attributed to the region’s capital, Bloemfontein. “Bloemfontein has enjoyed a healthy increase in total sales over the past few years. Notably, the city registered its highest peaks over the past decade in 2021 and 2022, at 3 492 and 3 295 units respectively (sales of both freehold and sectional title units according to Lightstone).”
Lightstone reports that 522 sectional title units and 282 freehold homes have been sold in Bloemfontein this year alone. “From April 2022 to March 2023, nearly one-third of all homebuyers in Bloemfontein are classed as young adults (18 to 35 years) as per Lightstone. We also speculate that the high volume of applications for sectional title properties can be attributed to this segment.”
Mpumalanga remains a strong contender for property investors
Mpumalanga continues to outpace in terms of property price performance and buy-to-let demand.
“Regardless of the climate, we are seeing brilliant results coming out of this tourism hotspot with particular focus on Mbombela (ex-Nelspruit) as the much-trafficked corridor between Pretoria and Maputo in Mozambique,” says Dyer.
As a gateway to the Kruger Park, Mpumalanga also presents an excellent investment opportunity and has enjoyed heightened demand for investment/ rental properties (currently at 7.9% of total applications in Q1 of 2023) barring a sharp dip from the end of 2021 to the beginning of 2022.
Investment/ rental applications surge. Source: ooba Home Loans.
Mbombela continues to entice first-time homebuyers – particularly as new developments such as Matumi Valley, Green Valley Estate, and Intaba Estate continue to pop up. “What is most interesting is that the average purchase price of first-time homes which continues to rise – from R955 097 in Q1 of 2022 to R1.038 million in Q1 of 2023 – an increase of 8.7%.”
Lifestyle and a close-knit community both remain firm drivers in the region’s growth. “While activity dropped in 2020, prices continued to rise. Sales subsequently rebounded to a decade high of 803 freehold homes in 2021, while sales of 741 freehold homes in 2022 were still the highest tally since 2014,” Dyer continues.
Over the past 12 months, 116 new plots were sold – 107 of which were located in estates. “Estates already account for nearly 40% of total housing stock in Mbombela, once again underpinning the need for security, a sense of community, amenities and a ‘lock up and go’ lifestyle.”
Estate living drives demand in Hoedspruit, Limpopo
Limpopo has enjoyed an average purchase price jump of 7.4% in less than a year, with an average purchase price of R1.5 million as of March 2023. The price of properties for first-time buyers has also seen a sharp uptick in a short time, rising from R918 500 in July 2022 to R1.295 million in March 2023. “This means that the average first-time buyer price in Limpopo is now higher than the national average purchase price, a good indicator of property confidence in the outlying regions.
“Some of the demand can be attributed to the small town of Hoedspruit (fondly dubbed ‘safari town’) which has experienced notable momentum in the price of freehold homes and vacant land between 2020 and 2023,” says Dyer. “
“Agriculture and mining are key economic contributors in Hoedspruit but what sets it apart for semigrants is the care-free lifestyle.”
Prices continue to rise in Hoedspruit. Source: Lightstone.
One of the fastest-growing inland towns in South Africa, Hoedspruit comprises just 2 800-plus adult residents and just over 70% of homes are located in estates. “Over the past 12 months, 41 freehold homes in estates sold at an average price of R3.4 million, while the five freehold homes sold during the same period which were not located in estates, sold at an average price of R1.97 million.”
Dyer believes that investing in the likes of Free State, Mpumalanga, and Limpopo is a solid investment strategy – particularly for first-time homebuyers looking to make their big break into the market. “These regions offer value for money and appeal to homebuyers/ tenants in search of lifestyle” he concludes.