The June oobarometer price index recorded a nominal increase in year-on-year house prices of 1.2 percent.

"The latest oobarometer shows a very slight improvement in year-on-year house prices," says Saul Geffen, chief executive of ooba. "Rather than suggesting a recovery in the market place, this may be attributed to a shift to higher priced properties in June, given affluent homebuyers’ ability to better adapt to strict bank lending practices."

The average purchase price according to the oobarometer is R774 449 in June 2008, compared to R784 427 in June 2009.

The month-on-month average purchase price has also increased nominally by 1.4 percent from R773 440 in May of this year.

The average purchase price of the first time buyer is showing a significant year-on-year reduction of 14.1 percent and a decline of 16.8 percent in comparison to May 2009.

"This is a clear indication of the pressure on first time buyers where banks' strict credit criteria, particularly their deposit criteria, is making entry into the property market difficult and is having a knock-on effect on property prices at this level," says Geffen.

A reduction of 6.3 percent in the year-on-year average approved bond size has been recorded from R679 224 in June 2008 to R636 169 June 2009, again reflecting the impact of higher bank deposit requirements.

The year-on-year average deposit, as a percentage of purchase price, has increased significantly by 54.9 percent. Buyers now require an average deposit of 18.9 percent of their purchase price in order to secure a bond, compared to the 12.2 percent average deposit required 12 months ago. The month-on-month data shows a slight reduction in average deposits from the previous month. The inability for home buyers to fund required deposits continues to depress the property market.

The average bank decline ratio has eased and is now at 47.5 percent, a 2.2 percent improvement on the previous year’s 49.7 percent and a two percent improvement on May’s statistics. The moderation in the rate of bank declines suggests that buyers’ affordability levels have slightly improved as a result of the lower interest rates. However, the applications declined by one lender and approved by another continued to deteriorate, with only 17.3 percent of applications accepted by another lender compared to 39.4 percent in the same month last year and 22.6 percent last month.

"Expectations are that the property market will continue to be hindered by the current economic conditions until the end of 2009, with recovery predicted by mid 2010," concludes Geffen.

Article from: www.iafrica.com