PROPERTY: House Price Growth Continues
Recent Western Cape Business News
According to the latest statistics released by Cape Town-based bond originator ooba, property prices in February showed positive year-on-year growth of 4.3%. This is the fourth consecutive month that ooba has recorded positive house price growth and follows growth of 6.7% recorded in January 2012, which was the highest year-on-year price increase since July 2010.
The February oobarometer price index reveals that the average house price rose to R 868 174 from R 832 105 a year earlier, while month-on-month property prices increased by 2.1%.
The average purchase price amongst first time buyers also continues its upward trajectory, showing year-on-year growth of 10.7% to R 663 092, from R 599 105 a year earlier. According to Saul Geffen, CEO of ooba, this is being driven partly by the relaxation in deposit requirements, which is providing a more favourable environment for first time homebuyers. The average approved bond size increased 10.9% to R 738 835 from R 666 124 a year ago, while the average deposit decreased by 25.1% to R129 339, down from R165 981 a year earlier. The average deposit is now equivalent to 14.9% of the purchase price.
However, a lower deposit size is one of the reasons for the initial bank decline ratio increasing by 2.3% year-on-year to 48.2% and the effective approval ratio showing a year-on-year decrease of 2% to 62.8%. “A higher proportion of lower deposit applications will typically result in higher decline rates, as they are considered more risky.
“Nevertheless, the relaxation allowing lower deposit loan applications is a positive, even though it initially results in a higher overall decline rate, as ultimately it opens up an opportunity for approving a segment of customers which have limited available funds for cash deposits.”
The ratio of applications declined by one lender but granted by another is showing a nominal year-on-year decrease of 0.5%, to 22.8% of applications.
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