First-time home buyers and people targeting the lower end of the suburban property spectrum may find themselves squeezed out of the market by higher mortgage rates and the requirements of the National Credit Act (NCA), implemented in June.
Early signs of this trend came from a survey of estate agents, the First National Bank (FNB) Property Barometer for the second quarter, released yesterday.
The lower end is defined by estate agents, but John Loos, an FNB property strategist, said that in the context of the survey, it would include houses worth less than R600 000. To afford a bond for R600 000, a borrower would need to earn at least R24 000 a month.
The second-quarter survey was supplemented by a survey last month to measure the impact of the NCA. Loos reported a "significant weakening … The percentage of first-time buyers in the market dropped to 16 percent in July from 20 percent in the second quarter. And 43 percent of respondents claim that applicants are struggling to qualify for home loans."
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