ooba launches new house price index : reports 1.9% decline in July

Index provides insight into behavioural aspects of buyer activity

Prices decline 1.9% year on year for July; 1.4% decline over June

ooba, (formerly MortgageSA), SA's largest bond originator, has today launched its own home-hunter-friendly price index called the 'oobarometer' which will be released in the first week of each month.

Saul Geffen, chief executive of ooba, said ooba's new house price index goes further than traditional bank price indices to give people a behavioural insight into buyer activity and vitally, an in-depth insight into banks' lending mood.

"Mortgage originators originate around 75% of all new residential home loans in South Africa and ooba is the first originator to release a house price index," said Geffen.

The oobarometer reveals that the average price of a property purchased in July 2008 was R782 385, down 1.9% from July 2007 when the average price was R 798 300. Prices have fallen 1.4% since June this year.

July's oobarometer shows that the average interest rate concession (to prime) was 1.21% in July this year compared to a more generous 1.29% in July 2007. In July 2008, interest rate concessions achieved at the 90th percentile was 1.8% below prime. The 90th percentile is where 10% of buyers get more and 90% get less than this rate concession level.

Deposits have also risen strongly - up 25% in the past month alone reflecting the significant shift in banks' lending criteria requiring substantially greater deposits from home buyers. The average deposit as a percentage of purchase prices was 18.1% in July this year, meaning buyers were putting down an extra 5% deposit from a year ago.

The oobarometer also shows the average home loan decline ratio in July 2008 was 51.1%, up sharply from just below 40% in the same month last year. The average decline ratio is the average of all home loan applications initially turned down by banks.

"However, when an application is rejected by one bank it is often approved by another," notes Geffen.

"ooba's stats show that about a third of all the home loan applications declined by one bank in July 2008 were approved by the other banks we send the application to."

"It's really important for homebuyers to shop around if they want to make sure they get approval, and on the best possible terms."

"The average price of a property purchased by first time buyers has reduced by 9.1% in the past year from R548 784 to R498 570 reflective of those buyers opting for smaller more affordable homes." Full oobarometer analysis:

Indicator

July

2008

July

2007

Change yr on yr (Jul 08 vs Jul 07)

June

2008

Change month on month (June 08 to Jul 08)

Avg purchase price

R 782,385

R 798,300

-1.9%

R 793,600

-1.4%

Avg purchase price

of  first time buyer

R 498,570

R 548,784

-9.1%

R 521,600

-4.4%

Avg approved bond size

 R 596,056

R 669,000

-10.9%

R 672,800

-11.4%

Avg deposit (as % of bond value)

18.1%

(R 142,117)

13,1%

(R 104,927)

35.4%

14.3%

(R 113,600)

25.1%

Avg age of applicant

37

37

No Change

37

No Change

Avg concession below prime

1.21%

1.29%

8 basis points less

1.25%

4 basis points less

Avg decline ratio

51.1%

39.9%

11.2% increase

50.1%

1% increase

Ratio of applications declined by one lender but approved by another

31.7%

42.4%

10.7% decline

33.9%

2.2% decline

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