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Johannesburg - Relaxed lending requirements are luring potential house-hunters back in droves to the residential property market, leading to a price leap, a mortgage originator said on Tuesday.
According to data collected by mortgage originator Ooba, the local residential sector has continued to show price growth in February, with a 7.8% increase in average house prices from January to February coming in at R895 031.
"The banks' more relaxed deposit criteria have stimulated buyer activity and supported increased application volumes," said Ooba CEO Saul Geffen.
According to Ooba, the average approved bond size showed a year-on-year (y/y) increase of 13.9%, in line with higher purchase prices and lower deposits recorded in February.
"We've been easing deposit criteria since September last year," said Johan Botha, senior economist at Standard Bank. Botha said home loan applications increased threefold between September and October as a result.
Botha said the bank's decision to offer 105% home loans to first-time buyers had had a direct impact on house prices. "It also contributed to positive sentiment that the economy is recovering," he said.
According to Ooba, the average deposit dropped by 8.9% in the last 12 months.
Absa's February house price index confirmed Ooba data.
Average nominal value of houses improved y/y in all three categories of small, medium-sized and large houses during the month, said Jacques du Toit, Absa senior property analyst.
Du Toit said the housing market is expected to gain further momentum during 2010, and he expects nominal values to be about 6% higher than in 2009.
The average small house (80m2 to 140m2) saw a 1.6% y/y increase in nominal value to R676 800, compared with a revised growth rate of 0.7% recorded in January, said Absa.
Values of medium-sized houses (141m2 to 220m2) went up 2.2% y/y to R953 600 in February, after a revised increase of 1% was registered in January.
The average nominal value of large houses (221m2 to 400m2) increased by 3.3% y/y in February to R1.4m, up from 3.1% in January.
- Fin24.com