HOUSING: Housing Well Into Positive Price Growth
Recent Western Cape Business News
The latest statistics released by ooba, South Africa’s leading bond origination company, reveal that the recovery in house prices continued year-on-year in March with above inflation growth.
The oobarometer price index recorded a year-on-year nominal price increase of 9.7% to R850 864 from R775 559, a slight deceleration from the 11.4% year-on-year price growth recorded in February.
According to ooba CEO, Saul Geffen, while there are supply side risks, the improving economic fundamentals, rising levels of activity, along with the surprise cut in interest rates announced in March, should help to sustain the momentum we have already witnessed. “The interest rate cut is also good news for current homeowners still under pressure from the difficult economic environment,” Says Geffen.
The ooba statistics also show that the average approved bond size increased 14.3% year-on-year in March to R679 114 from R593 902, in line with the rise in the average purchase price. The average deposit size as a percentage of the purchase price fell 13.7% year-on-year to 20.2%, as bank’s relaxation of their lending criteria filters through.
The average bank decline ratio increased slightly from 51.1% to 52.8% in the year to March 2010, however this is related to the mix of applications.
According to the ooba results, the ratio of home loan applications that have been declined by one lender but approved by another rose 3.1% year-on-year in March from 19% to 22.1%. “This is a positive development as there is a greater chance of obtaining loan approval if declined initially by one bank,” says Geffen.
“Overall, the signs are increasingly positive for the local housing market. We see a demand-driven recovery, assisted by maintained low interest rates, a continued recovery in economic growth and a more stable job market. We expect continued growth in house prices in excess of inflation for the remainder of 2010.”
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