PROPERTY: Gradual Improvement In Property Market
Recent Western Cape Business News
While the latest statistics released by ooba, South Africa’s leading bond origination company, confirm the continued improvement in the residential property market during the course of 2009, they also suggest that the recovery will continue to be gradual, rather than spectacular.
The oobarometer price index recorded a 1.8% increase in the average house purchase price over the twelve months to 31 December 2009 from R854 029 to R870 051. The 3% increase in the average purchase price in December 2009 from R844 250 in November, represents the seventh straight monthly rise in local house prices recorded by the oobarometer.
“The latter part of 2009 saw a steady improvement in the residential property market,” says Saul Geffen, chief executive of ooba. “We expect this trend to continue and pick up pace into 2010 as the economic environment improves and banks further ease up on their lending criteria.”
Additional evidence of the improved conditions in the housing market includes the 7.9% increase in the average approved bond size over the course of 2009 from R655 951 to R707 760. Geffen says that while this is due partly to the rise in the average purchase price during the year, the lower deposit requirements now required by banks has also been a contributing factor.
In December, the average deposit required as a percentage of the purchase price declined by 19.4% year-on-year. “Banks relaxed their deposit requirements during the latter part of the year,” says Geffen. “We go into 2010 with banks offering 100% bonds once again, which is good news for those potential homeowners who have no spare funds available for down payments. It is also a positive indicator of bank lending appetite and their expectations for the property market going forward.”
The outlook for the property market in 2010 is favourable, with all important drivers such as positive house price growth, increased application volumes, increased approvals, further expected relaxation of bank lending criteria, and increased competitiveness amongst lenders, supporting sustained recovery in the year ahead,” concludes Geffen.
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