More black homebuyers entering the market - ooba

File picture: James White

File picture: James White

Published Jul 19, 2016

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Johannesburg - The number of black homebuyers entering the residential property market has grown significantly over the past 12 months, according to mortgage originator ooba.

It reported yesterday that black homebuyers represented 62 percent of applications it received in the second quarter of this year, which was a 4 percentage point increase on the same period last year.

Rhys Dyer, the chief executive of ooba, said similarly 73 percent of all applications received from first-time homebuyers were from black homebuyers compared with 70 percent last year.

However, the increase in black homebuyers was unable to halt the continued slowing property price growth.

Ooba reported nominal house price growth of 2 percent year on year for the second quarter, while the average purchase price of first-time buyers increased by 2.8 percent.

Dyer said the sharpness of the decline in property price growth in the second quarter of this year was evident from the 6.2 percent year-on-year growth in the average purchase price in the first quarter of last year.

“Slowing economic growth, increasing unemployment, escalating inflationary pressure and higher interest rates continue to erode consumer affordability. Consumer confidence is at its lowest level in years. With property price growth below consumer price inflation, we expect zero to negative property price growth in real terms for a while to come.”

Ooba said its statistics continued to show a trend of higher approved bonds, which were up 7.1 percent year on year from the second quarter of last year, coupled with a marked 28.5 percent year-on-year decline in the average deposit as a percentage of the purchase price.

Affordability

Dyer said although these trends appeared to indicate healthy competition among banks, in reality it was probably indicative of the mix of business accepted by banks rather than banks relaxing their deposit requirements.

He said consumer affordability pressure was confirmed by lower bond approval rates, which declined by 4.5 percent year on year from the second quarter of last year.

Ooba’s statistics are in contrast to the Pam Golding residential property index, which rose by 6.7 percent year on year in May after averaging 6.4 percent in the first quarter.

Andrew Golding, the chief executive of the group, attributed the strength of the national housing market largely to the continued, robust outperformance of the Western Cape market relative to the national market and the robust growth in the prices of homes in the lower income price band.

Sandra Gordon, the head of Pam Golding Properties Research, said the house price inflation for smaller sectional title properties had been outperforming growth in house prices for larger freehold homes since late 2013.

Gordon said the continued strong growth in house price inflation for small sectional title properties of less than two bedrooms, for example, rose by 15.2 percent year on year in the first quarter of this year, according to First National Bank, compared with the marked slowdown to just 3.5 percent in house price inflation for large freehold properties of four or more bedrooms.

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