First-time homebuyers on the rise

2012-08-14 14:27

Johannesburg - There were several positive indicators for the residential property market, bond originator ooba said on Tuesday.

These included continued year-on-year growth in property prices, especially for first-time buyers.

Simultaneously, there had been a decline in the size of the deposit required.

"The average purchase price in July 2012 was R846 863, up 3.1% from R821 579 in July 2011," said ooba.

For first-time buyers, the average purchase price had increased by 7.8% year-on-year, from R609 417 in July last year to R657 069 in July this year.

However, the month-on-month purchase price statistics did indicate a trend of slowing growth in property prices, in line with slowing economic growth.

"Of our total intake of bond applications in July, 53% were from first-time buyers, a five percent increase from last year," says Rhys Dyer, ooba chief operating officer.

"The sustained higher levels of first-time buyer activity are underpinning good year-on-year growth in property prices in the first-time buyer segments."

The average home loan deposit had reduced from 15.1% of the purchase price in July last year to 12.6% of the purchase price in July this year.

"The reduction in deposits is a good indicator of bank credit appetite, reflecting improved access to finance for home buyers with limited deposits," ooba said.

As a further indicator of credit conditions, the approval rate had risen to in effect 65.3% of loan applications, from 64.2% last year.

This increase was driven by a "healthy improvement" in the percentage of applications which were declined by one bank, but approved by another, from 23.1% of applications last year to 27.6% this year.

The trailing approval rate, including loans approved after month-end, was 68.6%.

These improved lending conditions continued to drive strong year-on-year value growth, said ooba.

Home loan applications had seen a 28% increase in value, while the value of home loan approvals had increased by 38% in July - ooba's best monthly performance since 2008.

The Reserve Bank's decision to drop interest rates in July by a further 0.5% was likely to add a further mild stimulus to the lending environment, improving buyers' ability to qualify for loans.

"This, coupled with the improvements in approval rates and average deposits, is likely to sustain the current higher levels of lending activity," said Dyer.

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