Property remains in doldrums

Latest statistics from ooba, South Africa’s biggest bond originator, continue to reflect positive year-on-year price growth, up 3.4 percent (minus 2.5 percent when taking inflation of 5.9 percent into account) in March this year (R903,922) compared to March 2012 (R874,228).

However, the average house price is 0.5 percent (minus 5.4 percent when taking inflation of 5.9 percent into account) down on February 2013.

ooba continues to report record approval rates on top of the record highs set in the last quarter of 2012. The value of home loans approved through ooba in the first quarter of 2013 is up 23 percent on 2012. For the last six months of 2012, ooba’s approved home loans value was up by 38.8 percent compared to the same period in 2011.

“There is no doubt that there is growing activity in the property market, supported by increased confidence from both buyers and lenders,” says Saul Geffen, ooba CEO.

The average house price for first-time buyers was strongly up by 9.6 percent year on year to R690,474 but down 1.2 percent month on month from R698,721 in February. First-time buyers made up almost 52 percent of ooba’s applicants in March.

Further positive news for homebuyers is the continued drop in the average home loan deposit, dropping substantially by 21.2 percent year on year to R120,936, equivalent to 13.4 percent of the average purchase price. “This is further indication of the banks’ confidence in improving market conditions, and is good news for home loan applicants,” says Geffen. “However, we continue to advise our clients to save up for as large a deposit as possible, as this still increases their chances of having their home loan approved and on better terms.”

The average approved bond size increased 8 percent to R782,986 in March this year from R725,260 in March 2012.

The average initial bank decline ratio decreased 0.5 percent year on year and the percentage of applications that were declined by one bank but approved by another improved to 27.9 percent, up 3.6 percent year on year.

ooba’s effective approval rate, which is the overall percentage of loans approved once ooba has shopped the loan to multiple banks, was 66.5 percent in March, 2.1 percent up on March 2012, while ooba’s trailing approval rate, which takes into account loans approved after month-end, is currently 74.7 percent.

ooba continues to achieve the highest approval rates in the industry. “We secure approvals for 74 percent of the home loan applications we facilitate, which compares favourably with the overall average bank approval rate of 54 percent across the major lenders,” says Geffen. “This essentially means that homebuyers have on average a 37 percent better chance of getting their home loan approved when using ooba.

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