Home price turning point?
May oobarometer price index recorded a marginal year-on-year drop in houses
prices of 0.5 percent.
"The oobarometer continues to reflect declines in year-on-year house prices, but at a slower rate," says Saul Geffen, chief executive of ooba. "We believe that the recent series of interest rate cuts has provided a turning point in the property market and that we will see the market begin to stabilise by the end of the year."
The average purchase price according to the oobarometer was R777 277 in May 2008 compared to R773 440 in May 2009.
The month-on-month figures showed an increase of 0.7 percent from R767 769 in April 2009.
A 9.9 percent reduction in the year-on-year average bond size has been recorded; from R665 192 in May 2008 to R598 733 in May 2009. There has also been 1.4 percent reduction in the month-on-month average.
The year-on-year average deposit as percentage of purchase price continues to show a significant increase, up to 22.6 percent in May of this year compared to 14.4 percent last year. The month-on-month average is also up by 8.1 percent, from a 20.9 percent average deposit as percentage of purchase price in April.
"There has been a significant increase in deposits now required to purchase a home," says Geffen. "The lack of funds for deposits, despite good credit scores, is a big contributor to the current sluggishness in the property market."
The average bank decline ratio and the ratio of applications declined by one lender approved by another continue to show annual deterioration. The average decline ratio is at 49.5 percent compared to 46.8 percent in May 2008. Only 22.6 percent of applications declined by one lender are now approved by another, compared to 39.5 percent in May 2008.
However, month-on-month data shows slight improvement in both areas with a 0.5 percent decrease in the average decline ratio from 50.01 percent in April 2009 and a 6.9 percent absolute increase in ratio of applications declined by one lender but approved by another from 15.7 percent in April this year.
Whilst the property market is still in a downward cycle, general sentiment indicates that it will stabilise by the end of the year and begin recovery by mid 2010.
Article from: www.iafrica.com