PROPERTY: House Prices Show Positive Growth In March
Recent Western Cape Business News
Property prices showed positive year-on-year growth in March, according to the latest results released by ooba – a leading Cape Town-based bond originator.
The March oobarometer price index reveals that the average house price rose 1.1% year-on-year to R860 492 from R850 864 a year earlier. The growth in the average purchase price amongst first time buyers also showed an increase, with year-on-year growth of 4.5% to R623 179 in March 2011 from R596 357 a year earlier.
According to Saul Geffen, CEO of ooba, the results are both positive and surprising. “Given the high levels of growth experienced in the first half of last year, and the negative growth recorded for the last consecutive 4 months, we did not expect prices to return to positive territory so quickly. We will have to wait until next month to see whether this is an anomaly or a return to positive price growth.”
According to other indicators tracked by ooba, the average approved bond size increased 7.4% year on year in March to R725 973, compared with R676 256 a year earlier. The average deposit as a percentage of purchase price also fell 23.9% year-on-year to R134 519, equivalent to an average deposit of 15.6% of the purchase price.
The average decline ratio during March also decreased by 8.1% year on year, from 52.8% in 2010 to 44.7% in 2011. An additional positive indicator is that the effective overall approval rate continued to show a year-on-year increase of 5.6% to 64.5%.
The number of bond applications in March through ooba was the highest level recorded for nearly three years (since May 2008) and was 36% higher than the average monthly application intake recorded throughout 2010. March volumes were however only 36% of the application volumes recorded at the peak of the market in May 2007.
The levels of approved home loans also reached a recent high in March 2011. ooba’s March figures was the highest value of approved home loans since October 2008, two and a half years ago.
Geffen says that he expects the growth to continue. “ooba has experienced consistent month-on-month increases in application intake since the beginning of 2011. February was already significantly up, and March exceeded February by some margin. We expect to see this growth continuing.”
“With interest rates currently at a 30 year low, improved affordability has enabled many would-be homeowners to take the leap, as the cost of servicing a bond has reduced considerably. The improved affordability, combined with subdued property price growth, low inflation rates and real wage growth, has combined to make this a favourable environment for homebuyers.
Geffen says the continued relaxation in lending criteria by the major lenders is also a contributor to this rise in applications and approvals.
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