House prices rose almost 10% in past year
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.