A considerable amount of the property purchases were made in lower-priced rental properties, with 20.6% of the purchases made for properties priced at less than R500 000 and 24% for properties priced between R500 000 and R1 million.
FNB Private Bank Lending Chief Executive, Praven Subbramoney says this data mirrors the trend currently seen in the broader property market regarding the increase in secondary property buying in the more affordable segments driven by middle and high-income earners who are taking advantage of low borrowing costs and well-priced properties.
In addition to low-interest rates, the increased demand can be attributed to the savings customers made from not paying student accommodation during the lockdown period and the trading down in this market due to decreased demand.
Clients purchase additional properties for various reasons,
primarily for rental and holiday purposes. For rental property purchases, the buyer
typically looks at properties that fit within their financial management journey and wealth
creation aspirations. Having said that, student accommodation purchases as well as
sectional title properties are in demand due to their lock-up-and-go nature and lower
“What has also become prevalent is the upward trajectory in investing in this type of
property due to the energy and water-saving solutions which put money in the investors’
pocket. Coastal properties are also preferred for people looking for holiday homes and
with the advent of Air BnB, it has made it easier for these individuals to also earn rental
income on their holiday homes,” says Subbramoney.
“Building your property portfolio as an investment can be an effective money
management tool when used correctly, and in turn cultivate into a wealth creation
opportunity for you and your family for generations to come. For our clients, owning more
than one investment property can be used to speed up their wealth creation goals and
further achieve financial freedom through multiple sources of income,” says Eric Enslin,
CEO of FNB Private Wealth and RMB Private Bank.
Of those who bought secondary properties in 2020 and grew their property balance
sheets, 52% were male, and 48% were female. With this said, Enslin states that the
broader home buying picture, still depicts that women dominate the home buying market
by a remarkable 53%, especially in the first-time home buyers’ market.
Research shows that people are starting to acquire assets such as cars and properties at a
younger age. BetterBond’s average age of first-home applicants is 36, and research by
TPN shows that much of the investor activity is happening in this age group, starting from
the mid-twenties. This is also a time when many are starting to earn good salaries, and
their spending power is starting to increase.
From a regional point of view, 34% of secondary properties were purchased in Gauteng,
22% in the Western Cape and 9% in the KZN, mirroring the economical and job activity in
these leading provinces.
“Property represents a stable investment which will grow over time and serve as a wealth
creation tool for you and your family for future generations to come. If you are looking to
enter the properties market for a secondary properties, remember that property is a long-
term investment that comes with monthly costs. Before making the commitment, it is
always worthwhile to consult experts who will be able to assist you in the process of
turning your property into an investment and advise you on a strategy that will positively
impact the growth of your portfolio,” says Subbramoney.