As a percentage of total home buying, the first quarter 2016 FNB Estate Agent Survey pointed to a slowing in the level of first time buying. John Loos, FNB Home Loans household and property sector strategist also found agents perceive first time “buyer panic” to be subsiding and that the average home buyer age rose very slightly in 2015 to 44 years.
As a source of residential demand first time buying remains a significant source of housing demand at an estimated 21% of total home buying, but down on the prior quarter’s 26%.
In a follow up question, the bank attempted to ascertain the agents’ perceptions regarding the level of first time “buyer panic” in the market. First time buyer panic refers to when first time buyers become concerned with house price inflation, worrying that “if they don’t buy now they will never be able to afford a home in future”. This is important, because widespread buyer panic can cause a housing market’s price levels to “overshoot”, contributing strongly at times to house price “bubbles”. The sample of agents’ surveyed has pointed to a very significant percentage of first time buyers suffering from “buyer panic” in recent surveys. However, this percentage has begun to subside over the last two quarters, from a high of 54% in the third quarter of 2015 to 48% of first time buyers by the first quarter of 2016.
Age group buying
Overall young buyer transaction volumes remain modest. Examining the total number of individual buyers below the age of 40, of which a sizeable portion would be first time buyers, the bank found their numbers by late 2015 were only about 34% of a late-2013 high point.
A relatively strong market period through 2012 to 2014 appeared to contribute to a decline in the percentage of individual property buyers between the age of 20 and 29, from 16.34% of total buyers in the third quarter of 2011 to 13.63% in the final quarter of 2015. This percentage is now sharply down on last decade’s 20.81% high of February 2002. At that stage, real house prices were far lower than today.
The average age of individual property buyers of late is near to 44 years (43.82 years old as at February 2016), which represents a significant rise from the 40.65 year estimated at the end of 2007, right at the end of the boom period. The average home buyer age for 2015 rose very slightly, from 43.7 years in 2014 to 43.8 years.