Slowing property price growth in third quarter

Third quarter 2016 results from mortgage originator, ooba, show slowing property price growth under more constrained home loan lending conditions.

Residential property price growth is slowing as the supply of residential property outstrips buying demand, according to ooba chief executive, Rhys Dyer.

“Although the average purchase price increased by 5.9 percent in the third quarter of 2016 compared to the third quarter in the previous year, the rate of growth is slowing, with property price growth reflecting a 3.3 percent decline over the second quarter. When adjusting for inflation, house price growth is struggling to show any real year-on-year growth.”

The average purchase price of first time home buyers in the third quarter increased 7.2 percent, indicating slightly stronger demand fundamentals for property in the first time home buyer market. However the rate of growth in this market is also slowing.

Average deposits have remained fairly stable, with the third quarter of 2016 reflecting an average deposit of 15.4 percent of purchase price relative to the 15.9 percent in the third quarter of 2015.

“There has been a worsening in average bank decline rates, increasing from 43.2 percent in the third quarter of 2015 to 47.9 percent in the third quarter of 2016. Though there has been some limited tightening by banks, a significant factor in the increased decline rates is the worsening ability of home buyers to afford loans,” says Dyer.

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