According to Bill Rawson, Chairman of Rawson Properties, it is entirely possible that South Africans could be experiencing the same situation in the very near future, with many first-time home buyers struggling to buy their first home.
Reports in the media have stated that the solutions offered in Britain include a government 'Open Market HomeBuy' to be launched in October. This initiative is aimed at key public sector workers, as well as first-timers, and will enable buyers to take out a regular mortgage along with a loan on which no interest will be charged for five years.
Lending institutions have also expanded their calculations to take better account of rising wages, particularly for young professionals, with some offering mortgages based on how much buyers already pay in rent. Others allow several people to borrow together or offer deals under which parents take on part of the liability.
Rawson feels that joint ownership is the way of the future in the South African property market as well. 'Most first-time home buyers would find it easier to enter the market by buying property as part of a group'
He agrees that banks will have to look at more creative ways of financing property transactions, but that this will always have to be done in a responsible manner, as they are mandated by the National Credit Act to lend money responsibly.
Another solution regularly suggested in the press is for first-time buyers to rent a property for a few years, which is cheaper than buying, while saving for the deposit on a property. According to Rawson this could end up being a risky solution. 'It is definitely a gamble, as there is no guarantee that property prices will eventually come down. First-time buyers that are opting to wait may find that in a few years time they are completely priced out of the market. My advice will always be to get in sooner rather than later'