October oobarometer indicates 9.9% year-on-year increase in annual house prices

October oobarometer indicates 9.9% year-on-year increase in annual house prices

The October oobarometer price index recorded an increase in the year-on-year house prices of 9.9%.

"This is the fifth consecutive month that the oobarometer has shown a rise in house prices and it is the biggest increase within that period," says Saul Geffen, chief executive of ooba.

The average purchase price according to the oobarometer was R820,885 last month compared to R746,654 in October 2008. The month-on-month purchase price also shows a nominal increase of 1.8% from R806,494 in September this year.

The average purchase price for first time buyers has also shown a large year-on-year increase of 10.7% and a month-on-month increase of 3.7%.

"The drop in interest rates and banks loosening their lending criteria, has also positively affected the affordability of first time buyers and we are seeing an increase in activity from first time buyers," says Geffen.

The year-on-year average approved bond size has increased by 8.9%, from R636,339 in October 2008 to R693,008 in October 2009.

The average deposit as a percentage of purchase price has increased slightly in October, to 15.6% compared 12.5% in September, but is still considerably lower than the 23.1% in August this year. The change to lower deposits is a permanent shift as a result of relaxed bank requirements, however the changing mix of business will continue to fluctuate the monthly data for some time.

The average bank decline ratio is slightly up at 49.6%, compared to 48.4% in September. This slightly higher decline rate should be understood in the context of the significant increases in application volumes, rather than increases in bank rejections. Despite lenders having generally increased approval rates, a higher proportion of applications are now not being approved due to an increase in the proportion of marginal applicants who are trying to take advantage of the improved lending environment, particularly 100% loans which have stricter criteria to fulfil.

18.6% of applications which were initially declined in October were subsequently approved by another lender, which is marginally lower than September's ratio of 19.5%. This should also be seen in the context of the increased application volumes.

"The outlook for the property market is positive, with all important drivers such as increased application volumes, increased approvals, further relaxation of bank lending criteria and increased competitiveness amongst lenders indicating that the improvement in the market will be sustained," concludes Geffen.

Full oobarometer analysis:

Indicator

October

2009

October

2008

Change yr on yr (Oct 09 vs Oct 08)

September

2009

Change month on month (Oct 09 to Sep 09)

Avg purchase price

R 820,885

R 746,654

9.9%

R 806,494

1.8%%

Avg purchase price

of  first time buyer

R597,075

R 539,110

10.7%

R 575.811

3.7%

Avg approved bond size

< p align="center">693,008

< p align="center">R 636,339

8.9%

R 705,744

-1.8%%

Avg deposit (as % of purchase price)

15.6%

(R 127,877)

14.8%

(R 110,315)

5.4%

12.5%

(R100,750)

24.8%

Avg age of applicant

36

35

1 year older

37

1 Year Younger

Avg decline ratio

49.6%

49.6%

No Change

48.4%

1.2% Increase

Ratio of applications declined by one lender but approved by another

18.6%

34.6%

16.0% decrease

19.5%

0.9% decrease

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.