Head of Market Research at Absa RBB, Busi Ntshangase, explains that the growth in low-value homes seems to be further driven by the Finance-linked Individual Subsidy Programme (FLISP) – a first-time homeowner subsidy offered by government – as well as the gap in housing capital grants, development in “emerging townships” and saturation in “legacy townships”. People are also getting creative in how they make their housing affordable in their own ways, such as adopting intergenerational and hybrid living, Ntshangase says. Research undertaken by Absa in 2019 and 2020 enabled the Market Research team to develop in-depth and delineated profiles of local homeowners. Using this, they’re able to see trends correlating with profiles, such as “Young Millennials” and “Millennial Investors” who are pumping spare cash into their house bonds to pay them off quicker. This is an exciting finding given our young population: At least 35% of South Africa’s inhabitants fall between the ages of 15 and 34 years and purchasing power – even within property – is weighted in favour of young customers. This isn’t the only way in which the face of the typical homebuyer has changed. Some 56% of South African property buyers are single, and 72% of these are single women. They represent the most homes bought, but also the cheaper homes. The data from the study, Ntshangase says, has been eye-opening. “We had to really challenge our notion of what homeownership in South Africa looks like.” Furthermore, it underlined the bank and the home loan division’s pivot to be as customer-centric as possible, as well as the need to do considerably more “hand-holding”, guiding buyers through a process that we previously assumed was better understood than it turned out to be. “The research has illuminated for us that there needs to be a stronger three-way relationship between the bank, the estate agent and the buyer,” she adds. And if these opportunists can stick it out, property in the long run remains a growth asset class. The South African Savings Institute data shows that it is likely to produce 2-4% real (after inflation) returns – performing above bonds and cash, but under equities.

Not all consumers have the means to invest though, and many millions lost jobs or experienced a major dip in income in 2020. Absa, along with most of the other major banks and credit providers, responded by offering relief options to customers struggling to make ends meet. Khumalo says that 135 000 home loan accounts received relief under the first three-month Absa Payment Relief Programme offering, and 42 000 under the programme’s extension period. Interestingly, the percentages of customers coming in to make arrangements was roughly the same as before lockdown. Still a “substantial proportion of customers opted for payment relief, indicative of the financial difficulties that consumers currently experience.” “The uptake was significantly higher than our initial projections. Equally so, the customers’ ability to rehabilitate their situations after the expiry of payment relief has exceeded our expectations.” At the end of September, he tells us, about 7% of customers whose payment relief had expired, were late or in arrears with their payments, but Absa is anticipating these percentages to drop significantly due to the distressed customer assistance programme, Siyasizana – “we are helping each other” – which launched mid-year. Siyasizana, Khumalo says, was shaped from insights gleaned from the first relief response and was “designed to specifically focus on customers with temporary liquidity constraints”, with interventions and credit solutions personalised to each person’s circumstances. “Other options including debt restructuring, debt consolidation and asset realisation are also offered to customers, where appropriate.” Also on the table are “short- and long-term payment plans, comprehensive debt review processes, and distressed property refinance options”, including a dedicated team who actually assists customers to sell and move to a more affordable home if it comes to this. And beyond homeownership, Absa, in partnership with the National Treasury and the South African Reserve Bank, offer government-guaranteed loans to small and medium enterprises that are not able to meet their financial obligations during the lockdown period. They take a holistic view, Khumalo explains: “This is about customers’ financial future and what we can do to help them… we really believe and treat court-mandated repossessions as a last resort.”