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Johannesburg - There are definite signs the property market slump is coming to an end with data pointing to early signs of a market recovery, ooba - formerly MortgageSA - said on Wednesday.
"ooba has seen a 36% increase in home loans approved from April 2009 to August 2009," said Saul Geffen, chief executive, in a statement.
"In each month from April to August we have seen the first consecutive monthly increases in application volumes since May 2007," he said.
Since May 2007 the property market had experienced a slowdown due to a combination of factors which included the high price of debt, the introduction of the National Credit Act and banks tightening up their lending policies, Geffen said.
"This has been exacerbated by the sub-prime crisis, the global liquidity crisis that followed this and the current global economic slowdown."
He said one of the biggest drivers of a market recovery was bank lending.
"Recently we have seen an improvement in competitiveness between the banks over the past four months and a marked increase in approval rates across the board," Geffen said.
Banks' move to relax deposit requirements was a positive for prospective home buyers and for the property market.
"Over the past four months, the major lenders have begun to relax lending criteria, including deposit requirements.
"Banks are now targeting non-bank clients and rate concessions are becoming more aggressive," Geffen said.
He said easier lending, coupled with improved affordability thanks to lower interest rates, had helped kick start the property market in South Africa.
"We have seen an improvement in the performance in ooba's mortgage origination business over the last four months with consistent increases in volumes and we expect continued positive results going forward."
Geffen said both the US and UK property markets had recently shown improvements in housing prices.
"The UK housing prices rose for the fourth month in a row during August according to Nationwide, the UK's largest building society and the US indicated the first monthly rise in house prices since 2006 according to the Standard & Poor's/Case Shiller index of home prices."
Geffen said he believed the worst was over and the property market was on the road to recovery."
- Sapa