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House prices decline in January: ooba

Johannesburg - Residential property prices declined in January, albeit from a "solid base" following their strong recovery last year.

According to bond originator ooba, conditions were favourable for homebuyers.

Its oobarometer price index showed a year-on-year (y/y) decline in the average purchase price of 6.3% to R797 011 in January 2011, from R850 513 a year earlier.

The average purchase price of a first-time buyer declined by a modest 1.6% y/y to R576 675, from R585 992 a year ago.

CEO Saul Geffen said that while residential property prices were coming off their recent highs, the period of deflation was likely to be short-lived with flat growth expected in 2011.

Ooba said there had been an easing in lending criteria by SA's major banks.

"Over the last year we have seen the main lenders continue to relax their lending criteria and this has continued in January 2011, with the size of the deposit buyers are required to put down showing a significant decline."

In January, the average deposit as a percentage of the purchase price was also down by 41.8% y/y to R117 396, equivalent to 14.7% of the purchase price.

Geffen said that, in addition to the improved lending environment, the recent decline in prices presented an ideal bargaining opportunity for new homebuyers.
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