ooba's June Results Show Ongoing Property Buyer and Lender Confidence

House prices continue to show steady nominal year-on-year and month-on-month growth, according to the latest statistics from ooba, South Africa’s biggest bond originator. In June, the average house price grew 6.6% year on year, and 0.7% month on month to R919,965.

51.7% of ooba’s applications in June were from first-time buyers, which is down marginally by 0.3% year on year. Growth was also recorded in the first-time buyers’ average purchase price, increasing year on year at a slightly slower rate of 1.8% to R694,143.

ooba’s average approved bond size in June was higher both year on year and month on month by 8.2% and 4.7% respectively. The average approved bond size for first-time buyers has also increased year on year by 7.5% with a month-on-month increase of 4.5%.

“June 2013’s average bond size is our highest average bond size on record,” says Rhys Dyer, CEO of ooba. “This, coupled with the steady nominal growth in house prices, points to greater confidence in the property market.

There are also a number of indicators that demonstrate lenders’ improved appetite for extending credit for home loans. These include:

  • Lower average deposits, down by 8.7% year on year to R125,608, equal to 13.7% of the average purchase price.
  • Lower initial bank decline ratio, down slightly year on year by 0.5% and month on month by 0.9%.
  • An increased percentage of applications declined by one lender and then granted by another, up year on year by 0.8% and month on month by a healthy 2.9% to 28.7%.
  • ooba’s increased effective approval rate to 66.1%, which is showing a year-on-year increase of 0.8% and a strong month-on-month increase of 2.1%. In addition, ooba’s trailing effective approval rate, which takes into account approvals that come through after month-end, is 75.1% – up on the 73.4% reported in May. This indicates that over three quarters of loan applications processed through ooba are now being approved.

“With one of the highest approval rates in the market, ooba continues to prove that using a bond originator gives you a better chance of getting your home loan approved, in the shortest possible time,” says Dyer.

 

Full oobarometer analysis:

Indicator Jun
2013
Jun
2012
Change yr on yr
(May 13 vs May 12)
May
2013
Change month on month
(Jun 13 to May 13)
Avg purchase price 919,965 863,122 6.6% 913,500 0.7%
Avg purchase priceof first time buyer 694,143 682,042 1.8% 675,116 2.8%
Avg approved bond size 794,357 733,948 8.2% 758,848 4.7%
Avg deposit (as % of purchase price) 13.7%(R125,608) 15.0%(R129,174) -8.7% 16.9%(R154,652) -18.9%
Avg age of applicant 37 37 No Change 37 No Change
Avg initial decline ratio
(first bank decline)
47.6% 48.1% -0.5% 48.5% -0.9%
Ratio of applications declined by one lender but approved by another 28.7% 27.9% 0.8% 25.8% 2.9%
Effective approval ratio 66.1% 65.3% 0.8% 64.0% 2.1%