ooba’s February statistics signify house price growth dipping to below the inflation rate
Although ooba’s property statistics for February indicate year-on-year growth in house prices, slower year-on-year price growth trends are emerging. The Average Purchase Price is up by 4.3% to R1, 047,277, while the Average Purchase Price of First-time Buyers increased by 4.6% to R801, 144.
Rhys Dyer, ooba’s CEO, says: “At 4.3%, growth in property prices is currently below the inflation rate, which translates to negative growth in real terms. The less buoyant property market correlates with expectations of slower real economic growth and rising interest and inflation rates, which affect both consumer and business confidence.”
The deceleration in property price growth rates can be seen in the month-on-month Average Purchase Price, which is down -0.7%, while the Average Purchase Price for First-time Buyers recorded a nominal 0.1% increase.
Dyer adds: “Year-on-year, the Average Deposit as a Percentage of Purchase Price decreased by 34.3%. In February, ooba’s 100% bond applications dropped sharply from an average of 49% of ooba’s total intake in the preceding 12 months to 42% in February, despite its ratio of first-time buyers out of all applications received remaining fairly constant, Dyer explains: “This means that the lower ratio of 100% bond applications is not caused by an exodus of first-time buyers from the market, who currently account for 53% of ooba’s total intake of applications. More homebuyers entered the market in February with deposits, which is a good sign for the home loan market”.
The effect of the recent rate hike on housing affordability is evident in the 1.3% dip in the year-on-year total approval rates recorded in February. Fortunately for homebuyers, banks are still in healthy competition for market share in the home loan sector, which is evident in the more attractive average interest rates offered in February.
ooba’s home loan approval rate of 76% in February indicates that the company continues to secure approval for more than seven out of ten home loans that it processes. “Given the competitiveness and complexities of the current home loan environment, we recommend that prospective buyers use the professional services of a bond originator. Obtaining the most cost-effective home loan deal is an essential part of the journey to find a dream home,” concludes Dyer.