select
|

ooba’s fourth quarter 2016 results show housing market constrained by consumer budgets

2017 looks to be a challenging year for the South African property market, as quarterly statistics released by ooba, South Africa’s largest bond originator, point to ongoing affordability constraints for South African consumers. 

Rhys Dyer, ooba’s CEO says: “With the 2017 Budget Speech just around the corner, South Africa is battling to restore economic growth rates and to balance the books. Against this backdrop, many economists forecast increased personal taxes and increased taxes on consumer goods to be announced in the 2017 Budget to help plug the fiscal gap. This will put further spending pressure on consumers, especially those who are looking to buy property this year.”

The ooba statistics show that from the fourth quarter of 2015 (Q4) to Q4 of 2016 the Average Purchase Price indicated positive nominal growth of 7.1%. However, nominal quarter-on-quarter growth from Q3 to Q4 of 2016 confirms that growth in the property market has slowed significantly 

A year-on-year increase of 8.3% for Q4 in the First-time Homebuyer’s Average Purchase Price indicates the ongoing demand for lower-priced entry-level properties. 

Says Dyer: “Home Loan lenders have adopted a slightly more cautious lending approach, which is evidenced in the Average Deposit as a Percentage of Purchase Price, which showed a 5.5% increase year-on-year for Q4.

“Quarter-on-quarter, the average deposit of First-time Homebuyers increased by 18%, illustrating the challenges aspiring property buyers have in entering into the property market,” adds Dyer. 

Consumer affordability pressure is illustrated by the lower bond approval rates, down 2.7% year-on-year from the fourth quarter of 2015.  Dyer says that lower approval rates are an indication that fewer people are qualifying in terms of affordability for their property of choice.    Average interest rates increased by 10 basis points year on year from 0.28% above prime in Q4 2015 to 0.38% above prime in Q4 2016 - this despite the fact that homebuyers put down greater deposits.  This reflects the increased cost of credit for banks and further impacts affordability for homebuyers.
 
“Bond originators provide an essential service to any homebuyer looking for a home loan at an affordable rate. We believe our offering is even more relevant in the current recessive economic environment.” 

Dyer believes that it is vital that buyers are equipped with the right tools and information before they start looking for a home, to avoid disappointment.  

“Knowing what you can afford upfront, makes the home searching process much less stressful, which is why ooba is launching a free, online, self-service Bond Indicator tool in March to address the need for buyers to have a higher level of financial certainty. 
 
Despite the more challenging times in the property market, we continue to have one of the highest approval rates in the market and consistently secure bond approvals for over seven out of ten applications we process,” concludes Dyer. 





  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 24 Nov 2017
      Demand for secure estate living in Hout Bay has risen sharply in recent years, precipitating a spike in development with estate homes now accounting for 20.24% of the property landscape with the launch of an exclusive new gated development on 26 November adding 20 more units to the existing 1250 estate homes.
    • 24 Nov 2017
      There are some things that money can’t buy – spectacular views from Mouille Point to the V&A Waterfront and a trendy and lively neighbourhood that encapsulates the very best of the Cape Town lifestyle.
    • 24 Nov 2017
      Tshwane’s four-bedroom Mayoral mansion, nestled among ambassadorial residences in the upmarket suburb of Muckleneuk, fetched R5.1 million after spirited bidding at High Street Auctions’ final sale of the year.
    • 23 Nov 2017
      Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
    • 23 Nov 2017
      As the holiday season approaches, most of us are counting the days until that year-end bonus hits our account. There’s nothing quite like a little bank balance booster to get us in the holiday spirit.
    • 23 Nov 2017
      The Adelphi Centre (now entitled “ARTEM") in Sea Point, Cape Town, is being extensively renovated, and once complete will offer an ultra-luxurious galleria style shopping centre unlike any other seen on the Atlantic Seaboard or in Cape Town.
    • 23 Nov 2017
      If you are looking to sell your home in today’s real estate market, there are certain things that you need to include both inside and outside your house. Today’s generation of home buyers is looking toward a more eco-friendly, energy and water conscious home, and if your house stands out then you are more likely to be able to sell it.
    • 22 Nov 2017
      Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article the experts at Paddocks will address some of the issues that are causing confusion.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK