A generic pic of houses at Diepkloof Soweto. (430) Photo: Leon Nicholas

Roy Cokayne

Declining bank deposit requirements for home loans were aiding the continued year-on-year growth in house prices, particularly for first-time buyers, mortgage originator ooba said yesterday.

However, ooba also reported that there were indications that house price growth rate was slowing in line with the slowdown in the economy.

Rhys Dyer, ooba’s chief operating officer, said its statistics had continued to show a reduction in the average home loan deposit, which declined to 12.6 percent of the purchase price last month from 15.1 percent in July last year.

Dyer said the reduction in deposits was a good indicator of bank credit appetite and reflected improved access to finance for home buyers with limited deposits.

He said the effective approval rate was a further indicator of credit conditions and had increased to 65.3 percent of applications last month from 64.2 percent in July last year.

Dyer said the increase in the approval rate was driven by a healthy improvement in the percentage of applications that were declined by one bank but approved by another.

This highlighted the importance of shopping around for finance, he said.

Dyer said these improved lending conditions continued to drive strong year-on-year value growth, with the value of ooba’s home loan applications increasing last month by 28 percent year on year.

ooba revealed the average purchase price of a house rose last month by 3.1 percent to R846 863 from R821 579 in July last year.

The average purchase price for first-time buyers increased last month by 7.8 percent year on year, the 15th consecutive monthly increase, to R657 069 from R609 417 in July last year.

However, ooba said its month-on-month purchase price statistics indicated a trend of slowing growth in property prices, in line with the slowing economy.

Dyer said the sustained higher levels of first-time buyer activity were underpinning good year-on-year growth in property prices in the first-time buyer segments.

He added that 53 percent of ooba’s total intake of bond applications last month were from first-time buyers, which was a 5 percent increase from last year.

Dyer also explained that the decision by the Reserve Bank’s monetary policy committee to reduce interest rates last month by a further 0.5 percentage point was likely to add further mild stimulus to the lending environment by improving the ability of home buyers to qualify for loans, especially in the first-time home buyer’s market.

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