May oobarometer shows 0.5% drop in annual house prices

May oobarometer shows 0.5% drop in annual house prices

The May oobarometer price index recorded a marginal drop in the year-on-year houses prices of 0.5%.

"The oobarometer continues to reflect declines in year-on-year house prices, but at a slower rate," says Saul Geffen, chief executive of ooba. "We believe that the recent series of interest rate cuts has provided a turning point in the property market and that we will begin to see the market begin to stabilise by the end of the year."

The average purchase price according to the oobarometer R777,277 in May 2008 compared to R773,440 in May 2009.

The month-on-month has also dropped marginally by 0.9% from R767,769 in April 2009.

A 9.9% reduction in the year-on-year average bond size has been recorded from an average house price of R665,192 in May 2008 to R598,733 in May 2009. There has also been 1.4% reduction in the month-on-month average.

The year-on-year average deposit as percentage of purchase price continues to show a significant increase, up to 22.6% in May of this year compared to 14.4% last year. The month-on-month average is also up by 8.1%, from a 20.9% average deposit as percentage of purchase price in April.

"There has been a significant increase in deposits now required to purchase a home," says Geffen. "The lack of funds for deposits, despite good credit scores, is a big contributor to the current sluggishness in the property market."

The average bank decline ratio and the ratio of applications declined by one lender approved by another continue to show annual deterioration. The average decline ratio is at 49.5% compared to 46.8% in May 2008. Only 22.6% of applications declined by one lender are now approved by another, compared to 39.5% in May 2008.

However, month-on-month data shows slight improvement in both areas with a 0.5% decrease in the average decline ratio from 50.01% in April 2009, and a 6.9% absolute increase in ratio of applications declined by one lender but approved by another from 15.7% in April this year.

Whilst the property market is still in a downward cycle, general sentiment indicates that it will stabilise by the end of the year and begin recovery by mid 2010.

Full oobarometer analysis:

Indicator

May

2009

May

2008

Change yr on yr (May 09 vs May 08)

April

2009

Change month on month (May 09 to Apr 09)

Avg purchase price

R 773,440

R 777,277

-0.5%

R 767,769

0.7%

Avg purchase price

of  first time buyer

R 546,202

R 554,303

-1.5%

R 530,510

2.9%

Avg approved bond size

R 598,733

R 665,192

-9.9%

R 607,574

-1.4%

Avg deposit (as % of purchase price)

22.6%

(R 174,707)

14.4%

(R 112,085)

56.9%

20.9%

(R160,195)

-8.1%

Avg age of applicant

36

38

2 years younger

37

1 year younger

Avg decline ratio

49.5%

46.8%

2.7% increase

50.01%

0.5% decrease

Ratio of applications declined by one lender but approved by another

22.6%

39.5%

16.9% decrease

15.7%

6.9% increase

Hello ooba news

The latest oobarometer stats reveal that the average purchase price growth among first-time buyers remains strong at 12.1% in June. This, together with the continued easing in lending criteria, is good news for potential homebuyers in South Africa.

With the property market beginning to show signs of a recovery, it is more important than ever to ensure your home is correctly priced. Jenny Rushin, property finance manager at ooba, SA's leading mortgage originator, said that a property listed at the right price will give sellers the greatest chance of attracting buyers.

South African banks have loosened their lending criteria which has supported a revival in the property market and helped new buyers enter the market says South Africa's leading mortgage originator, ooba.

South Africa's leading bond origination company, ooba, has seen a 55% increase in the value of approved loans from April to September this year, with a 21% surge from August to September alone.

With house price indicators like the oobarometer perking up, smart buyers are slowly returning to the market and need to be armed with how to make the best purchase possible. Ben Seymour-Brown, manager of group direct sales at ooba, said: "We expect more people to return to the property market this year and certainly next as the economy recovers, the effect of lower interest rates is felt and confidence returns to bricks and mortar investment.