Residential house prices in SA grew slightly in June, compared with a year earlier, according to the latest results recorded by bond originator ooba, out on Monday.
The increase followed two months of year-on-year decreases in local house prices, it said.
The June oobarometer price index also revealed that the average house price rose 1% year on year to R845,725 from R837,599 a year earlier. The price index also recorded nominal month-on-month price growth of 0.5%.
According to other statistics tracked by ooba, growth in the average purchase price among first-time buyers also showed a slight increase, with year-on-year growth of 1.1% to R618,084 in June from R611,611 a year earlier.
Saul Geffen, CEO of ooba, said that further positive news included that the average deposit as a percentage of purchase price decreased by 25.1% year on year to R108,268, equivalent to an average deposit of 12.8% of the purchase price.
In addition, the average approved bond size also showed a year-on-year increase of 6.1% to R737,457 from R694,759 a year earlier.
The latest statistics also indicated that ooba's bond applications for June increased by 51.3% compared with the prior year and compared with a 47.1% year-on-year increase in applications in May and a 48.5% increase in April. “We have recorded consistent month-on-month increases in bond applications since the beginning of 2011,” Geffen said.
The company also revealed that the value of approved bonds reached a three-year high in June. “We have experienced a growth of 51.9% in the value of approved home loans in the last quarter in comparison with the same period in 2010. However, the volume of approved loans in June was still only 25% of the approved loans recorded at the peak of the market in May 2007.”
Geffen attributed the rise in approved bonds and applications to the company's increased market share, as well as organic growth from the improved property market and lending conditions.
He said the improved property market conditions were a direct result of the current low interest rate environment, following a reduction in interest rates of 650 basis points since 2008, which had improved affordability and reduced the cost of servicing a bond significantly.
“The record low interest rates, coupled with subdued property price inflation, increased bank approval rates and lower deposit requirements has resulted in an influx of applications by potential homeowners.”
Geffen said that the major lenders had also continued to relax their lending criteria, which had positively affected the effective approval rate - the overall percentage approved once ooba's application process is complete.
“The effective approval rate has increased to 63.9% in June, up from the lowest effective approval rate of 55.6% recorded in May 2010. However the effective approval rate is still well below ooba's peak approval rate of 81.26% recorded in May 2007,” Geffen concluded. - I-Net Bridge