Small Space, Smart Move: Why Starter Homes are the new power play for First-Time Buyers

• Nearly half of SA’s home loan applications come from first-time buyers choosing affordability over excess space.
• Starter homes offer financial perks, lower costs, quicker equity growth, and extra budget for upgrades or lifestyle.
• Compact living encourages creative design: multi-functional furniture, light-enhancing tricks, and efficient zoning

With interest rates softening, salaries improving, and the transfer duty exemption threshold rising by 10% (saving buyers up to R3,300), South Africa’s first-time buyers are making confident moves onto the property ladder. In fact, nearly half (46%) of all home loan applications now come from this category, many of whom are opting for starter homes, which allow them to take that first step without incurring excessive debt.

The Financial Appeal of Going Small

According to Jonathan Spencer of OneDayOnly.co.za, starter homes -
Typically one- or two-bedroom properties ranging from 70m² to 116m² - offer a more accessible entry point into the housing market. “They require a lower upfront investment, are cost-effective to maintain, and meet essential lifestyle needs. As property values tend to appreciate over time, these homes also enable buyers to build equity and eventually leverage the proceeds from resale to step up to a larger property.”

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He adds that beyond the lower purchase price, starter homes come with additional savings, from reduced utility bills and insurance premiums to more manageable property taxes and rates.

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“This frees up budget for the fun stuff - décor, upgrades, and lifestyle items that personalise the space and make it feel like home.”

Making Small Spaces Work

Whether buyers plan to live in their starter home or rent it out in future, thoughtful choices can go a long way. Spencer shares a few practical interior design tips tailored to compact homes:

• Start with the essentials: Invest in quality basics like a comfortable bed and couch before focusing on trendy extras.
• Choose multi-functional pieces: Opt for furniture that serves more than one purpose—ottomans with storage, fold-out dining tables that double as desks, and bookshelves that can act as room dividers.
• Enhance the sense of space: Use light colours, mirrors, and natural light to make rooms feel larger and more open.
• Make every metre count: Create flexible zones, like a bedroom-office hybrid or a kitchen-dining nook.
• Use vertical space: Wall-mounted lighting, shelving, and décor elements help reduce clutter and free up floor area.
• Layer lighting: Combine overhead lights with statement lamps or wall sconces to build ambience and depth.

A Smart Stepping Stone

While purchasing a larger property and furnishing it gradually may seem like the more practical choice, Spencer notes that rising living costs have made this option increasingly out of reach for many.

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‍“Even if it means investing in items that might not suit a future, larger home, a smaller home can offer greater financial flexibility in the short term. Ultimately, the decision hinges on the buyer’s current financial circumstances and long-term property goals.”

Importantly, starter homes are no longer viewed as a temporary compromise. “They’ve become a symbol of smart investment and modern living,” he explains. “With more buyers prioritising affordability over square meterage, the ‘starter home economy’ reflects a new generation of property owners who value smart use of space.”

“Starter homes prove that small spaces can deliver big returns,” Spencer concludes. “It’s a win for first-time buyers and a trend we expect will continue as South Africans reimagine what homeownership can look like.”

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