Property slump is over!

The August oobarometer price index recorded an increase in year-on-year house prices of 6.9 percent.

"The latest oobarometer shows an improvement in year-on-year house prices for the third month in a row," says Rhys Dyer, chief operating officer of ooba. "There are clear signs that we are seeing the end of the downturn and that the property market is gearing itself for recovery.

"One of the biggest drivers of a market recovery is bank lending and we have seen an improvement in competitiveness between the banks over the past four months and an increase in approval rates across the board," says Dyer.

The average purchase price according to the oobarometer was R795 241 in August 2009, compared to R743 403 in August 2008.

The month-on-month average purchase price has also increased by 2.5 percent from R775 172 in July of this year.

While the year-on-year average bond size is still down with a 5.4 percent reduction, from R611 026 in August this year compared to R646 194 this time last year, the month-on-month average approved bond size has shown a four percent improvement from R587 222.

The year-on-year average deposit as a percentage of purchase price continues to show an increase. Buyers currently require an average deposit of 23.1 percent of their purchase price in order to secure a bond, compared to the 13 percent in August 2008. However, this is an improvement on the average deposit required from 24.2 percent in July.

"The reduction in the average deposit indicates an increased appetite of the banks to lend, evidenced by the recent relaxation of deposit requirements by the major lenders," says Dyer.

The average bank decline ratio continues to show improvement and is now at 45.1 percent, a 5.9 percent improvement on the previous year’s 51 percent and a 2.2 percent improvement on July’s statistics.

"The month-on-month average bank decline ratio shows an improvement for the fourth consecutive month, a further indication that banks are moving to relax lending requirements," says Dyer. "This, coupled with the improved affordability of the average homebuyer on the back of the recent rate cuts, is good news for prospective homebuyers."

Applications declined by one lender and approved by another still show year-on-year decreases with 19.2 percent of applications being accepted by another lender. There is a nominal 0.5 percent deterioration on July’s figures.

"There is mounting evidence that the property market is over the worst and is now on the road to recovery," concludes Dyer. "These 'green shoots' are evident in increased applications and increased approvals, all driven by improved affordability, relaxation in the bank lending criteria, increased bank competitiveness and increased demand."

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