Home price growth slowing

According to the latest results released by bond originator ooba, indicators continue to point to a positive outlook for the local residential property market.

Prices up by 6.8 percent

The oobarometer price index revealed that the average house price rose 6.8 percent year-on-year in June to R837 599 from R784 427 a year earlier.

"House prices are continuing to increase, albeit at a slower pace than in the past few months," says Saul Geffen at ooba. "We have seen a sharp recovery in house prices for the first half of this year with three months of double digit year-on-year house price growth between February and May."

Average deposit now at 17 percent

Meanwhile, the growth in the average purchase price amongst first time buyers remains strong with year-on-year growth of 12.1 percent in June.

According to other indicators tracked by ooba, the average approved bond size increased 14.3 percent year-on-year in June to R695 381, compared with R608 316 a year earlier. The average deposit as a percentage of purchase price fell 24.4 percent year-on-year to R142 218, equivalent to an average deposit of 17 percent of the purchase price.

"We are seeing a continued easing in lending criteria, which is good news for potential homebuyers and the property market in general."

Sentiment remains positive

The average decline ratio increased marginally in June, up 1.3 percent year-on-year to 48.8 percent from 47.5 percent a year earlier, due to the higher proportion of 100 percent loans in June. However, on a month-on-month basis the decline ratio fell 4.1 percent to 48.8 percent from 52.9 percent in May.

The ratio of applications declined by one lender but approved by another increased 7.5 percent year-on-year to 24.8 percent. "This is good news for homebuyers as it indicates a higher probability of loan approval from another bank even if initially declined. It also demonstrates the importance of shopping around in securing home loan approval.

Slower growth ahead

"General sentiment has no doubt been enhanced by the successful hosting of the World Cup. Overall, the signs remain positive for the housing market although we expect price growth to continue at a slightly slower pace in the second half of the year."

Article from: www.iafrica.com