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Property Talk

Property Talk

Author: Andreas Wassenaar
Date: 2018-06-22

Average age of property buyers

The average age of homebuyers is a fascinating statistic and gives realtors an insight into who their key target market is. The trend in this average age reveals a broad general economic cycle.

According to FNB's detail research, towards the end of the last decade's pre-2008 housing bubble, the estimated average age of individual property buyers was 40.69 years as at December 2007. Following the dramatic financial and housing market crisis that followed, by March 2009 this average age had risen to 43.6 years.

This rising trend has continued and by April 2018 the average age of homebuyers was recorded as 44.11 years. Recessionary economic conditions and higher interest rates and tighter lending criteria imposed by the banks, make it far tougher for younger buyers to enter the housing market.

The group of younger aspirant first time home buyers typically sit on the sidelines in greater numbers during tougher financial times as they are mostly highly credit-dependent and have no financial buffers with which to weather an economic storm.

The pre-2007 GDP growth rates of 5%+ have not been experienced since and therefore understandable that the overall age trend has been upwards. Within the last ten years there was a short lived recovery between 2009 and 2011 that had some decline in average age as younger home buyers returned to the market.

Unfortunately post 2011 this recovery was not sustained, and with the interest rate hiking in South Africa between 2014 and 2016 the average age started increasing. If however we view the average age data over a far longer 35-year period from 1980 we notice that the average age in 1980 was significantly lower at 38.36 years, and since then, despite cyclical ups and downs, the trend line has been upwards to its current 44 years.

This indicates that there is more at play than just the general economic cycle impacting on the age of buyers. If we further analyze the age groups over this longer period by the typical age decade segments we note that the age group below 30 has seen a sharp decline from 22.15% to 12.34%. The 30-39 age group was stable for a long period of time but has declined steadily from 37.61% in August 2007 to 29.22% by April 2018.

Another interesting aspect is the percentage of sellers selling in order to downscale due to life stage. This is currently estimated at 25% of all sellers. This is a large group of older people who then buy something smaller or more suitable to their specific requirements.

Younger people are renting for longer or exploring opportunities outside of the country thereby taking them out of the potential pool of buyers. For estate agents it means dealing with slightly older buyers on average and being able to service their particular requirements.