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Consumer behaviour during the different phases of home ownership: Ewald Kellerman (Absa Home Loans)

Affordability causes the most anxiety in the home-buying process.

SIKI MGABADELI: Affordability remains the foremost consideration for anyone contemplating buying a home in South Africa. That’s one of the key findings of the Absa Homeowner Insights, the first-to-market report released today. It delves into consumer behaviour and experiences during the different phases of ownership.
    Ewald Kellerman is head of customer interaction, Absa Home Loans, and he speaks to us now. Ewald, thanks for your time this evening. Before we go into the findings just tell us how the report itself was compiled.

EWALD KELLERMAN: Thank you very much, Siki. The report itself comes out of the thinking that we are actively chasing to become a customer-centric organisation, and I think the first thing we realised is that we don’t always know what the customer insights look like. So we tasked a partners of ours, Columinate, to go out and do customer research and ask about 1 200 participants questions around the buying process to try and determine what their thoughts and feeling are around experiencing the journey of buying property.

SIKI MGABADELI: So what are some of those key decisions or the key thinking that consumers go through, then, in their journey towards homeownership?

EWALD KELLERMAN: If I may start off with the very basic buying process, if consumers start the buying process it’s quite a nice emotional exciting journey – “I am going to buy a property”. But around a third of them, once they start looking, have to re-assess their needs once they realise how much they can afford and what the market looks like. So about a third of people have to re-assess what they can do, and most of them state that because of the affordability they’ve underestimated the costs of property and what they can qualify for.

SIKI MGABADELI: That’s interesting, because I was reading in the report that only around 40% of applicants are granted home loans after the bank assesses them. So what’s the gap between what we as consumers think we can afford and what the bank tells us we can actually afford?

EWALD KELLERMAN: It’s a difficult question to answer, but to answer in a slightly different way, about 87% of the consumers that responded in the survey said they were confident of what they could afford, and we ended up only approving about [40?] percent. So there is unfortunately a significant gap between what consumers think they can afford and how affordability looks like at the end of the day.

SIKI MGABADELI: So, beside the affordability, I understand you are going to be revealing some of the other findings of the report over the next few weeks.

EWALD KELLERMAN: That’s correct. I think affordability was the first and most prominent aspect that stood out. It was listed as the aspect that caused the most anxiety in the home-buying process. And I think that was a nice place to start focusing on. But I think our journey runs a lot deeper and I think we’ve got much more to delve into to try and understand our customers and to try to create our business around them.

SIKI MGABADELI: Thanks to Ewald Kellerman.

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