August oobarometer - green shoots of recovery

August oobarometer - green shoots of recovery

The August oobarometer price index recorded an increase in year-on-year house prices of 6.9%.

"The latest oobarometer shows an improvement in year-on-year house prices for the third month in a row," says Rhys Dyer, chief operating officer of ooba. "There are clear signs that we are seeing the end of the downturn and that the property market is gearing itself for recovery."

"One of the biggest drivers of a market recovery is bank lending and we have seen an improvement in competitiveness between the banks over the past four months and an increase in approval rates across the board," says Dyer.

The average purchase price according to the oobarometer is R795,241 in August 2009, compared to R743,403 in August 2008.

The month-on-month average purchase price has also increased by 2.5% from R775,172 in July of this year.

While the year-on-year average bond size is still down with a 5.4% reduction, from R611,026 in August this year compared to R646,194 this time last year, the month-on-month average approved bond size has shown a 4.0% improvement from R587, 222.

The year-on-year average deposit as a percentage of purchase price continues to show an increase. Buyers currently require an average deposit of 23.1% of their purchase price in order to secure a bond, compared to the 13% in August 2008. However, this is an improvement on the average deposit required from 24.2% in July.

"The reduction in the average deposit indicates an increased appetite of the banks to lend, evidenced by the recent relaxation of deposit requirements by the major lenders" says Dyer.

The average bank decline ratio continues to show improvement and is now at 45.1%, a 5.9% improvement on the previous year's 51% and a 2.2% improvement on July's statistics.

"The month-on-month average bank decline ratio shows an improvement for the fourth consecutive month, a further indication that banks are moving to relax lending requirements," says Dyer. "This, coupled with the improved affordability of the average homebuyer on the back of the recent rate cuts, is good news for prospective homebuyers."

Applications declined by one lender and approved by another still show year-on-year decreases with 19.2% of applications being accepted by another lender. There is a nominal 0.5% deterioration on July's figures.

"There is mounting evidence that the property market is over the worst and is now on the road to recovery," concludes Dyer. "These `green shoots' are evident in increased applications and increased approvals, all driven by improved affordability, relaxation in the bank lending criteria, increased bank competitiveness and increased demand."

Full oobarometer analysis:

Indicator

August

2009

August

2008

Change yr on yr (Aug 09 vs Aug 08)

July

2009

Change month on month (Aug 09 to July 09)

Avg purchase price

R 795,241

R 743,403

6.9%

R 775,172

2.5%

Avg purchase price

of  first time buyer

R549,949

R 505,691

8.7%

R 545,487*

0.8%

Avg approved bond size

< p align="center">611,026

< p align="center">R 646,194

-5.4%

R 587,222

4.0%

Avg deposit (as % of purchase price)

23.1%

(R 184,215)

13.0%

(R 97,209)

77.6%%

24.2%

(R187,950)

-4.5%

Avg age of applicant

36

37

1 year younger

37

1 Year Younger

Avg decline ratio

45.1%

51.0%

5.9% decrease

47.3%

2.2% decrease

Ratio of applications declined by one lender but approved by another

19.2%

38.6%

19.4% decrease

19.7%

0.5% decrease

Hello ooba news

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If you're thinking about buying your first home, get your financial affairs in order as soon as possible. You need a clean credit record to secure a home loan. Unless you have a clean record of servicing debt, your bank will be unlikely to grant you a home loan.