House prices taking off

Growth in the average house purchase price accelerated in April, according to the latest statistics released on Thursday by bond origination company ooba.

The oobarometer price index recorded a year-on-year nominal price increase of 14.8 percent to R881 044 in April 2010 from R767 769 during the same period the year before. This is the second time that the oobarometer has recorded double digit price growth this year.

Good times rolling

The April figures also show an improvement on the 9.7 percent year-on-year growth recorded in March.

According to Saul Geffen, CEO of ooba, the double digit price increase provides further evidence that the recovery in the housing market is now in full swing. "This is now the eleventh consecutive month of positive house price growth and we expect this trend to continue supported by low interest rates and improving economic fundamentals."

First-timers spending more

The increase in the average purchase price of a first time buyer was even more pronounced, with an 18.15 percent increase year-on-year in April to R626 719 from R530 510 a year earlier.

The ooba statistics also show that the average approved bond size experienced a year-on-year increase of 13.1 percent to R689 613 from R609 690 and a month-on-month increase of 1.5 percent, which is in line with the purchase price growth.

Average deposit now at 21.7 percent

The average deposit as a percentage of purchase price increased 5.3 percent in April to 21.7 percent of the total price, which is primarily attributable to the higher purchase prices recorded and the requirement for higher deposits in the higher purchase price bands.

The 4.6 percent year-on-year increase in the average decline ratio to 54.1 percent in April is as a result of stricter lending criteria being applied to applications with lower deposits, says Geffen. "We have seen a significant increase in applications with lower deposits and these applications have lower approval rates." He adds that affordability remains the most common reason for banks rejecting an application

Nearly half of applicants are black

The proportion of black and coloured buyers represents nearly half of all applications. Currently, 39 percent of home loan applicants are black; seven percent are coloured buyers while white home loan applicants represent 46 percent and Asian applicants eight percent of the total.

Geffen says the outlook for the housing market remains positive and he expects price growth to remain above inflation for the rest of the year. "The full impact of the recent reduction in interest rates in March is yet to be felt, so we expect the benefit of that decision to be reflected in the coming months."

Article from: www.iafrica.com