Repeat buyers give real estate a big vote of confidence

The household income required to buy the average home has increased by less than 2% in the past 24 months, despite the fact that the average home price has risen by more than 17%.
According to the latest statistics from BetterLife Home Loans, SA’s leading mortgage origination group, the difference has been accounted for by homebuyers putting down bigger cash deposits, and by a 16% increase in the average approved bond size, from R672 000 two years ago to R782 000 in the 12 months to end-April.
“And both these adjustments,” says BetterLife CEO Shaun Rademeyer, “indicate households that are in much better financial shape than they were in 2013, with less debt and more discretionary income available to cover bigger monthly mortgage instalments.”
What is more, the figures show that repeat buyers now account for some 53% of new home loan applications compared to 46% two years ago, and that many of them are upgrading to more expensive properties, he says.
“This is a real vote of confidence in the future of the property market, especially since these buyers are clearly now using the equity they have built up in their existing properties to pay bigger deposits rather than to pay off personal loans, credit card balances and other debts.”
As for first-time buyers, the household income required to buy the average starter home has risen by just 1,5% over the past two years, while the average approved bond size has risen by almost 10% to R598 000, Rademeyer says.
“However, the average percentage of purchase price required as a deposit from first-time buyers has increased slightly (0,35%), and the additional cash requirement appears to have somewhat dampened demand in this sector. This is understandable because first-time buyers tend to be young people whose ability to save is most affected when the cost of any essential such as transport and electricity goes up.”
Nevertheless, he says, first-time buyers have accounted for a sterling 40% of formally granted home loans in the past 12 months, and 30% of the total value of formally granted loans.
Meanwhile the percentage of home loan applications submitted to the banks that are being declined outright continues to fall, according to the BetterLife statistics. The average in the year to end-April was 28%, down from 29% in the year to end-March and 31% at the end of April 2014.
“But even though this shows that the banks also have more confidence in the market now,” says Rademeyer, “it is still advantageous for prospective buyers to apply for their home loans through a reputable mortgage originator like BetterLife that will prepare their application properly, motivate it individually and ensure that they get the best interest rate possible.”
This is underlined, he says, by the fact that BetterLife has been able to secure the approval of 73% of all the home loan applications it has submitted to the banks in the past 12 months.
“And even more impressive, we believe, is the fact that we have “rescued” more than 25 000 home loan applications worth a total of about R18,7bn in the past 12 months. These were applications that were initially turned down by one bank but that we were able to have approved by another bank, and together they account for almost half the total value of home loans approved during this period.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us