The price of an average home in South Africa dropped from R881 044 to R823 483. A decline of 6,5%, in April according to figures released by major bond originator, Ooba. The average price of affordable home dropped by a modest 0,2% to R625 252 year-on-year (y/y).
Saul Geffen, chief executive of the company says that the drop in prices indicates that house prices in South Africa are continuing to decline on the back of some stronger growth that was experienced during the second half of last year.
He says that Ooba expects the negative growth trend to be reversed in the second half of this year when some moderate positive price growth will occur. He says that the average deposit size – as a percentage of the purchase price – also dropped sharply to 13,1% or R108 164. This was a decline of 39,6% year-on-year.
Geffen says that statistics show that the average bond size was 3,7% larger at R715 319 in April, up from R689 742 for the same month last year. He says this is a clear indication that banks are relaxing their lending criteria and their deposit requirements.
Geffen points out that there is some good news for buyers as banks appear to be relaxing their lending criteria and the initial bond decline ratio dropped by 8,7% y/y to 45,4% while the effective approval ratio increased from 57,3% in April last year to 64,4% last month.
He says the stronger approval rates are good news for the home-buying sector and follow higher record numbers in March this year when the company’s approval figure was the highest it has been since October 2008, more than two-and-a-half years ago.
Geffen says the ability to obtain bond financing from banks and financial institutions is one of the biggest drivers of the property market so any improvements in the lending rates must be welcomed.
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