Johannesburg - Growth in residential property prices continued to decline in February this year after the sharp recovery in the first half of last year and this presents a good buying opportunity, said bond originator ooba on Tuesday.
The oobarometer price index recorded a year-on-year (y/y) decline in the average purchase price of 7% to R832 105 from R895 031 a year earlier. There was, however, positive month-on-month growth of 4.4% since January.Saul Geffen
, ooba CEO, said the improvement in month-on-month statistics in purchase price growth indicated that the worst might be over.
"This is the first month-on-month increase in average purchase prices since September 2010 and is an encouraging sign."
In another positive sign, the effective approval rate continued to show a y/y increase of 5% to 64.8%. This was borne out by a reduction of 5.6% in the average initial decline ratio to 45.9%, while the ratio of applications being declined by one lender but approved by another rose 1.4% to 23.3%.
Geffen said the continued relaxation in lending criteria by the major lenders was positive for the housing market.
"The ability to obtain financing is one of the biggest drivers in the property market, so this improvement is an indicator for the health of the property market going forward," Geffen said.
In other statistics published by ooba, the average approved bond size fell 7.6% y/y, in line with the lower y/y purchase price to R666 836.
The average deposit size as a percentage of the purchase price also recorded a y/y drop of 3.1% to 19.9%, or R165 269.
Geffen said prospective home buyers might use the opportunity to negotiate on sellers' asking prices. "Prospective homebuyers, particularly those with a sizeable deposit to put down, may use the current opportunity to negotiate on price."
He said low interest rates also mean home buyers can access cheap finance.
In February, ooba's home loan applications by first-time homebuyers exceeded repeat homebuyers' applications for the first time. First-time homebuyers represented 51.50% of all applications in February.