Johannesburg - House price growth, while positive, remains below the very strong levels recorded earlier in the year as the residential property market recovery continues to taper off.
According to bond originator ooba, its latest oobarometer price index released on Wednesday showed that the average house purchase price increased by 6.1% year-on-year to R855 729 in September 2010 from R806 494 a year ago.
The average purchase price by first time buyers rose marginally year-on-year, up 1.6% to R584 890 in September from R575 811 a year ago.
Kay Geldenhuys, National Property Finance Processing Manager at ooba, said the slow trend in house price growth was to be expected considering prices recovered very strongly in the first half of the year.
"The impact of the recent rate cutting cycle has largely fed through to the property market already and we do not expect much further stimulus from this."
However, while house prices had decreased from the double digit growth experienced earlier in 2010, Geldenhuys still expected growth to be in excess of inflation for the remainder of the year.
The ooba statistics also showed that the average approved bond size was flat year-on-year, down a marginal 0.7% to R689 939 for the twelve months to September from R694 530.
The average deposit as a percentage of purchase price rose significantly to 19.4% (equivalent to R165 790) year-on-year in September from 13.9% (equivalent to R111 964) a year earlier.
"This significant increase is largely due to the mix of business received in September rather than suggesting that banks are applying stricter deposit criteria," Geldenhuys said.
There was some positive news for house buyers with the effective decline ratio falling by 6.8% year-on-year to 32.2% from 39%, giving an effective approval rate of 67.8% in September 2010.
This resulted from the average initial decline ratio falling 1.8% in the year to 46.6% from 48.4% and the ratio of applications declined by one lender but approved by another increasing by 11.4% to 30.9% in September from 19.5% a year earlier.
Geldenhuys said it was important that consumers were not disheartened if their first bond application was turned down.
"Different banks have different lending criteria and, as these statistics show, it is vital that consumers shop around when looking for a home loan.
Even if a first application was accepted by one lender, by shopping around consumers could also negotiate an improved rate concession, which would save them thousands in interest over the term of the loan.
"Although house price growth is expected to continue to moderate over the coming months, given the current slower growth in economic activity, the fundamentals of the housing market remain sound and positive nominal house price growth is expected for the remainder of 2010," Geldenhuys said.