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Positive house price growth and record number of first time home buyers

The latest statistics from ooba, South Africa’s biggest bond originator, show positive year-on-year price growth of 3.7% reflecting an average purchase price of R913,364.  The average year on year price growth for the first 6 months of 2013 was 4.9% against an average of 6.04% for the 5 months to end of November 2013. This points to stronger price growth trends in the second half of the year.

Healthy price growth was recorded in the First-time Buyers segment, with an average purchase price of R707,428, which is an increase year on year of  6.2%.   54% of ooba’s applications in November were from first-time buyers, almost 3% higher year-on-year, and reflecting the highest percentage level of activity recorded in this market.

“The ideal environment currently exists for first-time buyers to gain a foothold on the property ladder,” says Rhys Dyer, ooba CEO.  He says that the present market conditions are supported by the low interest rate environment which, coupled with subdued property price inflation and improved lending policies, is making it easier for first-time buyers to purchase homes.

Other statistics published by ooba reveal that the Average Approved Bond size, at R792,921, was  7.9% higher year on year,  and the Average Deposit recorded was 13.2% of the purchase price.  “We advise potential buyers to save for a deposit, as these loans achieve higher approval rates and better terms”, says Dyer.

The Initial Decline Ratio at 47.4% was up very slightly year on year,  while the Ratio of Applications Declined by One Lender, Granted by another has increased by 2.8% year on year to 27.2%.  Dyer says these figures highlight the need for consumers to shop around. “Homebuyers are assured a higher probability of an approved loan if they apply to more than one bank, a service that bond originators such as ooba provide for free.”

ooba’s Effective Approval Rate of 65.5% for November recorded a year-on-year increase of 0.3% and a month-on-month increase of 0.1%.  The Trailing Effective Approval Rate, which takes into account applications approved after month end, is 72%, showing that ooba is obtaining approval for more than seven out of every 10 home loan applications it receives.

“While the lending environment is improving, first time buyers and all buyers alike can benefit enormously from being pre-qualified for finance before putting in an offer on a property,” says Dyer.  ooba’s expanded prequalification service, called oobaqualified  provides buyers with a network of highly skilled pre-qualification experts located around the country who will assist buyers to access their credit report, assess their credit standing, calculate their affordability, compile the relevant paperwork and, within 24 hours, provide them with a prequalified loan certificate.

“Being prequalified allows buyers to shop in the right price bracket with the confidence that in all likelihood, their bond will be approved,” says Dyer. “It makes sense for any prospective home buyer to get oobaqualified before they start to look– and this is a free service.” 

Full oobarometer analysis:

Indicator

Nov

2013

Nov

2012

Change yr on yr

(Nov 13 vs Nov 12)

Oct

2013

Change month

on month

(Nov 13 to Oct 13)

Avg purchase price

913,364

880,475

3.7%

935,252

-2.3%

Avg purchase price

of  first time buyer

707,428

666,317

6.2%

711,691

-0.6%

Avg approved bond size

792,921

734,648

7.9%

795,993

-0.4%

Avg deposit (as % of purchase price)

13.2%

(R120,443)

16.6%

(R145,827)

-20.5%

14.9%

(R139,259)

-11.4%

Avg age of applicant

37

37

No Change

37

No Change

Avg initial decline ratio

(first bank decline)

47.4%

46.0%

1.4%

47.2%

0.2%

Ratio of applications declined by one lender but approved by another

27.2%

24.4%

2.8%

26.7%

0.5%

Effective approval ratio

65.5%

65.2%

0.3%

65.4%

0.1%







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