Deteriorating consumer confidence sees residential property slowdown

ooba’s property statistics for May show a marked slowdown in house price growth, with the year-on-year change in the Average Purchase Price showing negative nominal growth.  The Average Purchase Price is down by -0.5% year on year from R1,072,615 to R1,067,703.  This is the first year-on-year reduction in house prices that the company has seen since December 2012.

The Average Purchase Price of First-time Buyers is still showing some year-on-year growth albeit at a slower rate, with a 3% increase year-on-year to R820,155.

Rhys Dyer, CEO of ooba, says: “The slowdown in residential property price growth does reflect slowing demand for property as South Africans are faced with poor economic growth, high inflationary pressures and increasingly expensive credit. A further factor has been a noticeable change in the makeup of properties being bonded with a greater percentage of smaller and medium sized properties in the mix, as compared to the same period last year.”

Despite the negative year-on-year property price growth, the ooba Average Approved Bond Size showed continued strong growth, with a year-on-year uptick of 7.9% from R898,578 to R969,205.  As a result the Average Deposit dropped significantly from a year ago, from 16.2% of the purchase price in May 2015 to 9.2% in May 2016.

Dyer says: “This reduction in deposits as a percentage of the purchase price comes at a time when banks are tightening their scorecards and requesting homebuyers to put down larger deposits, which appears counter-cyclical.  The reason for this, again seems to be in the differing mix of properties currently being bonded, with greater demand for the smaller and medium sized properties, than was the case 12 months ago. 

“Banks’ Average Initial Decline Ratio is up by 4.6% reflecting the more cautious approach that banks are taking in their selection of successful bond applicants. The increase in average interest rate from 0.33% above prime last year to 0.49% this year, is also reflective, not only of the change in the mix of properties being bonded, but also banks becoming more conservative on rate.

In these times, we believe ooba has a vital role to play in helping homebuyers obtain bond finance, given the increasingly cautious stance from banks and the tougher homebuyer affordability environment. We have the expertise to source the best home loan, while our homebuyers focus on finding their dream home,” concludes Dyer.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Feb 2018
      An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
    • 22 Feb 2018
      What do you do if you love your home’s location and the area, but the home no longer fits your growing family’s needs? Do you stay and renovate your existing home or find a home that meets your developing criteria?
    • 22 Feb 2018
      While every owner wants to sell their property at the best possible price, overpricing a home can be the kiss of death for a sale.
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
    • 21 Feb 2018
      These days most buyers are using online property portals like Private Property when house hunting due to the convenience, up to date information and variety on offer. “The property portals have revolutionised the way buyers shop, but they do need to be cautious – viewing photos online is no replacement for viewing the property in person,” says Bruce Swain, CEO of Leapfrog Property Group.
    • 20 Feb 2018
      Owning a home is a milestone that most South Africans aspire to. Becoming a homeowner is a step towards growing personal wealth and owning an asset that appreciates in value over time, provided of course that the correct principles are applied during the buying stage of the process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Feb 2018
      The suburb of Greenstone in Johannesburg east came to be over the last two decades. “In the beginning, it was literally just a hill with not so much as a shopping centre,” says Michael Levy, Property Consultant at Jawitz Properties Bedfordview. Today it has plenty shopping facilities and is fully built, boasting high-density, upmarket housing and residential estates, though still has a few pockets poised for commercial development.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us