oobarometer shows house prices flat for November

The November 'oobarometer' price index shows flat average house price growth year-on-year.

The oobarometer indicated an increase in average purchase prices of 10.2% from October to November.

"It appears that the increase in house prices from October to November may be attributed to a shift to higher priced properties in November given affluent buyers' ability to adapt to stricter lending practices," says Saul Geffen, chief executive of ooba (formerly MortgageSA).

House prices were R827 463 in November compared to R751,118 in October.

Average deposits continue to show substantial year-on-year increases with a 31.5% rise in the average deposit as a percentage of purchase price from November 2007.

"The increase in average deposits is a function of the significant change in the bank's deposit requirements given the tighter lending landscape and high levels of defaults," notes Geffen.

The average purchase price for first time buyers increased marginally by 0.5% from October to November but dropped slightly by 0.6% from R 566,702 in November 2007 to R 563,354 in November 2008.

The average age of first time buyers has changed for the first time since the oobarometer was launched now reflecting they are one year older, at an average age of 38, when making their first home purchase.

While first time buyers are feeling the pinch and have been adversely affected by the economic conditions Geffen suggests that potential buyers should recognise that there are also positive spin-offs from these conditions, specifically for those wanting to get on the property ladder.

"Buyers should use the faltering property market to their advantage and should try negotiate a deep discount to the asking price when it comes to buying a first property," notes Geffen.

The month-on-month average bank decline ratio, which is the average percentage of all home loan applications initially rejected, has increased to 51.8%; a 1.6% rise from October.

"The increase in the average bank decline ratio reflects the banks continuing tightening of lending criteria," says Geffen. "Banks have been hit hard by high interest rates and defaulting home owners, and they have imposed much stricter lending measures.

"It is definitely much harder for buyers to get home loan approval as banks now require increased deposits and are very cautious in regard to new lending. However, the major banks have widely variant approaches to individual customers, both in regard to securing approvals and interest rates concessions, so make sure you shop around", concludes Geffen.

Full oobarometer analysis:

Indicator

November

2008

November

2007

Change yr on yr (Nov 08 vs Nov 07)

October

2008

Change month on month (Oct 08 to Nov 08)

Avg purchase price

R 827,463

R 827,565

-0.01%

R 751,118

10.2%

Avg purchase price

of  first time buyer

 

R 563,354

R 566,702

-0.6%

R 560,623

0.5%

Avg approved bond size

R 665,212

R 703,580

-5.5%

R 602,903

10.3%%

Avg deposit (as % of purchase price)

19.6%

(R 162,251)

14.9%

(R 123,985)

31.5%

19.7%

(R 148,215)

-0.5%

Avg age of applicant

38

37

1 Year Older

37

1 Year Older

Avg decline ratio

51.2%

43.4%

7.8% increase

49.6%

1.6% increase

Ratio of applications declined by one lender but approved by another

30.8%

38.4%

7.6% decrease

32.0%

-1.2% decrease

Hello ooba news

The implementation of the National Credit Act in June this year caused a slowdown in mortgage approvals as banks and applicants adjusted to the new regulations - but now SA's leading originator reports that approvals are returning to pre-NCA levels.

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"Rather invest in simple, streamlined furniture," she says. "Try to have pieces that have legs and are not boxy. Not only will you have created space but also the functionality of the room improves as well."