House prices rose al­most 10% in past year

Weekend Argus (Saturday Edition) - - PROPERTY -

THE OC­TO­BER oo­barom­e­ter price in­dex recorded a 9.9 per­cent in­crease in house prices over the same pe­riod last year. “This is the fifth con­sec­u­tive month that the in­dex has shown a rise in house prices and it is the big­gest in­crease in that pe­riod,” says Saul Gef­fen, chief ex­ec­u­tive of ooba.

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

The av­er­age price for first-time bu ye r s h a s a l s o i n c re a s e d by 10.7 per­cent over the same pe­riod last year, and by 3.7 per­cent mon­thon-month.

“The drop in in­ter­est rates and banks loos­en­ing their lend­ing cri­te­ria, have made homes more af­ford­able so more first time buy­ers are ap­ply­ing for bonds,” says Gef­fen.

The av­er­age ap­proved bond size has in­creased by 8.9 per­cent, from R636 339 in Oc­to­ber 2008 to R693 008 in Oc­to­ber this year.

The av­er­age de­posit as a per­cent­age of price in­creased slightly in Oc­to­ber to 15.6 per­cent com­pared to 12.5 per­cent in Septem­ber, but is still con­sid­er­ably lower than the 23.1 per­cent in Au­gust. The change to lower de­posits is a re­sult of re­laxed bank re­quire­ments, says Gef­fen.

“The av­er­age bank de­cline ra­tio is slightly up at 49.6 per­cent, com­pared to 48.4 per­cent in Septem­ber. The slightly higher de­cline rate should be un­der­stood in the con­text of more applications rather than more bank re­jec­tions. Al­though lenders’ ap­proval rates have risen, more 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 per­cent loans.”

Gef­fen says 18.6 per­cent of applications that had been ini­tially de­clined in Oc­to­ber were sub­se­quently ap­proved by an­other lender, which is marginally lower than Septem­ber’s ra­tio of 19.5 per­cent. This should also be seen in the con­text of more applications.

“The out­look for the prop­erty mar­ket is pos­i­tive, with all im­por­tant driv­ers such as more applications, more ap­provals, fur­ther re­lax­ation of bank lend­ing cri­te­ria and in­creased com­pet­i­tive­ness among lenders in­di­cat­ing that the im­prove­ment in the mar­ket will be sus­tained,” says Gef­fen.

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