The housing boom is back
The latest statistics released by bond origination company ooba reveal that the recovery in house prices continued year-on-year in March with above inflation growth.

The oobarometer price index recorded a year-on-year nominal price increase of 9.7 percent to R850 864 from R775 559, a slight deceleration from the 11.4 percent year-on-year price growth recorded in February.

Sustained momentum

According to ooba CEO Saul Geffen, while there are supply side risks, the improving economic fundamentals and rising levels of activity along with the surprise cut in interest rates announced in March should help to sustain the momentum we have already witnessed. "The interest rate cut is also good news for current homeowners still under pressure from the difficult economic environment," says Geffen.

The ooba statistics also show that the average approved bond size increased 14.3 percent year-on-year in March to R679 114 from R593 902, in line with the rise in the average purchase price. The average deposit size as a percentage of the purchase price fell 13.7 percent year-on-year to 20.2 percent as bank’s relaxation of their lending criteria filters through.

The average bank decline ratio increased slightly from 51.1 percent to 52.8 percent in the year to March 2010. This is, however, related to the mix of applications.

Demand driven recovery

According to the ooba results, the ratio of home loan applications that have been declined by one lender but approved by another rose 3.1 percent year-on-year in March from 19 percent to 22.1 percent. "This is a positive development as there is a greater chance of obtaining loan approval if declined initially by one bank," says Geffen.

"Overall, the signs are increasingly positive for the local housing market. We see a demand-driven recovery, assisted by maintained low interest rates, a continued recovery in economic growth and a more stable job market. We expect continued growth in house prices in excess of inflation for the remainder of 2010."

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