Ooba results show continues strengthening in home prices for first-time buyers

Jul 11, 2012

The latest statistics released by ooba, South Africa's leading bond originator, show that June was the 14th consecutive month of positive year-on-year property price growth for first-time buyers, and the eighth consecutive month ooba has recorded an increase in residential property prices.

According to the June oobarometer price index, the average house price shows positive year-on-year growth of 6.1%, and a nominal month-on-month decline of 0.7%.

“This increase indicates that there is sustained demand for property, which is translating into higher property prices,” says Saul Geffen, CEO of ooba. “However, the month-on-month decline does indicate a tempering of the positive momentum.”

The average price of a house bought by a first-time buyer was R682,042 in that month, compared to R603,658 a year ago – an increase of 13%. Month on month, the growth was 5.7% on May's average first-time buyer house price of R645,458.

“For the month of June, 52% of our total intake of home loan applications was from first time buyers – up 3.8% year on year, indicating that there is continued appetite in this sector underpinned by improved access to finance.”

Further good news for first-time buyers is that while there was a slight increase in the initial bank decline ratio (1.1% higher year on year), the ratio of applications declined by one lender, granted by another shows a healthy year-on-year increase to 27.9% from 23.2%. “The year-on-year growth of applications that are initially declined but then approved by another lender highlights the benefits of using a mortgage originator to cast as wide a net as possible when applying for a home loan,” says Geffen.

 

The average approved bond size continued to show positive growth, up 4.5% to R733,833 from R702,438 a year ago, while the average deposit currently sits at 15% of the average house price.

The June average bank decline rate is 48.1%, down 1.1% from the prior year. The oobarometer shows that ooba's effective approval rate is up 1.4% year on year, at 65.3%. The trailing effective approval rate, which takes into account loans approved via ooba after month-end is 70.9%, meaning seven out of every 10 home loan applications are currently being approved through ooba.

The statistics also showed that 96% of home loan applications received by ooba in June were from buyers purchasing a primary residence, up from 89% in June 2009. This shows that the buy-to-let market continues to be sluggish despite the relatively cheap cost of raising financing.

Full oobarometer analysis:

Indicator

Jun

2012

Jun

2011

Change yr on yr

(Jun 12 vs Jun 11)

May

2012

Change month

on month

(Jun 12 to May 12)

Avg purchase price

863,122

813,811

6.1%

869,088

-0.7%

Avg purchase price

of  first time buyer

682,042

603,658

13.0%

645,458

5.7%

Avg approved bond size

733,833

702,438

4.5%

737,774

-0.5%

 

Avg deposit (as % of purchase price)

 

15.0%

(R129,289)

13.7%

(R111,373)

9.5%

15.1%

(R131,314)

-0.7%

Avg age of applicant

37

37

No Change

37

No Change

Avg initial decline ratio

(first bank decline)

48.1%

47.0%

1.1%

47.9%

0.2%

 

Ratio of applications declined by one lender but approved by another

 

27.9%

23.2%

4.7%

28.4%

-0.5%

Effective approval ratio

65.3%

63.9%

1.4%

65.7%

-0.4%

 

Ends

  • Property market
  • Home Loans
  • ooba
  • Bond Origination
  • first time buyers
  • Property News

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