The youth in South Africa are purchasing fewer properties, and the number of cars sold to them has also decreased over the past decade.
According to Lightstone data, in 2012, those under 35 accounted for 45% of property purchases and 39% of new car purchases – but by 2022, these numbers had dropped to 38% and 31%, respectively.
Property transfers (of properties transacting for more than R20,000) to youth over the past ten years have declined from 87,675 (45%) in 2012 to 81,519 (40%) in 2017 and 69,304 (38%) in 2022.
In addition to declining property transfers, those under 35 are buying properties later in life while also switching to the lifestyle benefits offered by Sectional Title properties. The average age of first-time buyers is higher than it was ten years ago, and they are increasingly buying solo.
The proportion of sales to the youth is lowest in the under R20,000 band, rising to 34% in the R20,000 to R500,000 band and 44% (the highest) in the R500,000 to R1 million band before dropping off to 39% in the R1 million to R2 million band and 27% in the over R2 million band.
The data showed the average price of purchases by youth over the ten years has increased from R700,000 in 2012 to R930,000 in 2017 and R1.2 million in 2022.
The increase, however, is largely attributable to house price inflation and not higher-value assets being purchased, said Lightstone.
Youth buyers are opting increasingly for Sectional Title properties, and their interest in Freehold properties is waning, while interest in Estates is consistent.
“The shift is consistent with a preference for urban living which emphasises convenience and lifestyle amenities,” said Lightstone.
“This trend is influenced by the younger generation’s desire to live closer to work, reducing commuting time and providing easy access to recreational activities, restaurants, and shopping centres,” it added.
Youth are also buying properties later in life, as the graph below shows, with 2017 and then 2022 volumes being higher as young people head to 35 years of age.
Vehicles
According to Lightstone’s Signio platform, which automates the vehicle finance and insurance process, youth accounted for 31% of new car sales in 2022 compared to 39% in 2012.
While factors such as load shedding, heightened inflation, and the recent and consecutive interest rate hikes have played their role in the rising cost of car ownership in South Africa, new and used vehicle prices have also increased.
According to TransUnion’s latest Vehicle Pricing Index (VPI), the price of new vehicles, on average, increased by 6.3% in Q1 2023 alone.
Adding to the challenges of owning a car is that used-vehicle prices have experienced, on average, a more significant increase than new cars, with the report recording a price increase of 8.1% in Q1 2023 (1.1% above inflation).
Interestingly, the report also showed that older cars (three years old) showed an even greater price increase – with prices rising between 9% and 14.2%.
These price increases left little option for the cash-strapped youth.
The report showed that the percentage of cars – both new and used – being financed below R200,000 declined to 20% in Q1 2023 from 25% in Q1 2022, likely due to the increased average purchase price of new vehicles, leaving little choice for prospective buyers in this price band.
The data further found that 30% of vehicle financing deals were for cars between R200,000 and R300,000 – meaning around 50% of prospective car buyers are shopping for vehicles under R300,000.
According to Lightstone, over the past five years, Volkswagen has become increasingly popular among younger consumers, accounting for just over 25% of the market share.
Ford and Suzuki are also experiencing growth in popularity. On the other hand, Toyota has seen a decline in market share, dropping from 20% in 2012 to just under 15% in 2022.
The big winner in the vehicle segment is the Crossover, which has climbed from around 3% in 2012 to just under 15% in 2022. SUVs and Above-One-Ton-Double-Cabs have also grown in popularity, while small and medium Passenger vehicles have been the biggest losers.
Source – businesstech.co.za