Marked increase in mortgage-dependent buyers

The past few months have seen a noticeable return of mortgage-dependent buyers to the Cape’s residential property market. 

So says Laurie Wener, Pam Golding Properties’ (PGP’s) MD for the Western Cape region, which includes the greater Cape Town metropolitan area. She says after a long period in which PGP has seen concluded transactions mainly dominated by cash buyers, in late 2013 and early 2014 there has been a resurgence of buyers entering the market with bond finance required to secure their purchase. However, this has not diminished the number of cash buyers still active in some areas.
“These mortgage-dependent buyers are mainly purchasing in the R3 million to R8 million price range,” says Wener, “with a typical loan to value ratio of around 50 to 60 percent. They include a number of family buyers, both existing Capetonians and those relocating from up-country provinces, who are looking to purchase homes in areas close to high-quality schools and well-established infrastructure. These include the Southern Suburbs and Atlantic Seaboard, as well as the Western Seaboard, where the beachfront lifestyle and value for money are seen as key appealing factors.”
Wener says the surge in mortgage-dependent buyers is a sign of confidence in the recovery of the residential property market, as well as indicating a slight easing of financial institutions’ lending criteria. Figures from mortgage originators ooba seem to bear this out, with their “oobarometer” for March 2014 pointing to an effective bond approval ratio of 68.2 percent – an increase of just under two percent year on year. Meanwhile ooba’s average purchase price has also show strong year-on-year growth of 8.3 percent, bringing this figure to R978 637 in March 2014.
“The improved access to mortgage finance and heightened activity from mortgage-dependent buyers only further entrenches our sense that the market has entered a positive growth phase,” says Wener. “Banks appears to be gaining confidence in lending, which is good news for all categories of buyers, and most especially for first-time buyers wishing to gain a foothold in the property market. The fact that this growth trend is being noted despite the recent interest rate hike, makes it all the more encouraging.”

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