First-time buyers drive SA’s township property boom
Published August 2024
First-time buyers looking for affordable housing options are drawn to South Africa’s traditional township property markets where most of the transactions taking place are around the R750,000 price point. Less than 14% of BetterBond’s registered bonds in township areas between January and May this year were above R1 million, and only one was more than R2 million.
According to Lightstone, just more than half of properties in the affordable market – classified as any property up to the value of R750 000 – are located in traditional townships. This accords with BetterBond’s application data which shows that in the past six months, 65% of registered bonds in township suburbs have been for homes of up to R750,000. In this price band, Shoshunguve in Pretoria, Protea Glen and Protea North in Soweto and Ivory Park in Thembisa offer considerable value for money. To afford a bond of R750,000, a buyer needs a gross household income of around R27,000, well within BetterBond’s first-time buyer average income of R43,800.
Popular townships
The most popular township suburbs across all price bands in the past six months were Protea Glen and Soshanguve, jointly accounting for 86% of all bonds registered with BetterBond. Protea Glen has become one of the more sought-after township areas because of its affordability and ideal location close to shopping centres, schools and public transport routes. It is popular with first-time buyers and young families. It’s possible to buy a well-sized two-bedroom home in Protea Glen for R650,000. Similarly, in Soshanguve a bond of R690,000 will buy a two-bedroom family home. This expansive suburb offers access to essential amenities, and it is also home to Tshwane University of Technology’s Soshanguve South Campus.
Over the past six months in Gauteng, there has also been strong bond activity in Ivory Park, Tembisa, Daveyton in Ekurhuleni and Sebokeng in the South. BetterBond data showed that in this same period in Sebokeng, all the buyers were between the ages of 30 and 39, which points to the township’s appeal for first-time buyers and young families looking for a solid investment in a well-established neighbourhood. An example of a home at the upper end of this market is a listing for a modern three-bedroom home with a swimming pool, home security that includes CCTV cameras and a custom-designed lapa, on an erf of more than 400m2, for R1.1 million.
In the Western Cape, it’s in Mitchell’s Plain that the data shows the most activity, with nine registered bonds. This established and diverse residential area comprising numerous suburbs appeals to various age and income groups. BetterBond registered a bond for just R150,000, the lowest during this period, in this area. The highest bond registered in Mitchell’s Plain was for R900,000, still well below government’s R1.1 million transfer duty threshold set to make homeownership more accessible.
Gugulethu in the Western Cape also offers affordable housing opportunities, adds Bendall, with two bonds registered there in the past six months for R200,000 and R500,000. Although “Gugs” is one of our country’s oldest townships, it still appeals to younger residents. Both bond applicants for these homes were younger than 25.
Althone, also in the Western Cape, was the only suburb to register a bond application of more than R2 million with BetterBond in the past six months. Athlone is one of the suburbs offering affordable housing to have shown impressive price appreciation in recent years. Two of the four bonds registered by BetterBond were above R1.7 million, attesting to the growing demand for property in the area. According to Property24, the average sales price in Athlone in 2023 was R1.6 million, more than double the R750 000 it was a decade ago.
Age of township buyers
Lightstone also notes that the average age of township buyers is 38, with very few being younger than 30. BetterBond data mirrors this trend, with 52% of its township buyers being between the ages of 30 and 39. Of the 183 buyers who applied for a bond in one of the traditional townships, fewer than 10% were younger than 24.
Mature township buyers, between the ages of 40 and 49, considered Protea Glen, Soshanguve and Mitchell’s Plain for their property investment. BetterBond noted the oldest bond application, at 62, was for a property in Soshanguve. Younger buyers up to the age of 25 opted for homes in Kagiso, Protea Glen, Soshanguve and Gugulethu.
The BetterBond application data for township properties shows that these areas appeal to a range of buyers – particularly those between the ages of 30 and 39 who account for 52% of all applicants. As BetterBond’s average first-time buyer age is 37, this suggests a strong interest in properties in traditional township areas from aspirant buyers looking to invest in real estate. More buyers mean greater economic growth and investor confidence, and this will lead to a proliferation of essential services and amenities that will benefit surrounding communities.