Growth in the average house purchase price accelerated in April, new statistics released by bond origination company ooba on Thursday revealed.
The Oobarometer price index recorded a year-on-year (y/y) nominal price increase of 14,8% to R881,044 in April 2010 from R767,769 during the same period in 2009.
The April figures also revealed an improvement on the 9,7% y/y growth recorded in March.
Saul Geffen, CEO of ooba, said the double-digit price increase provided further evidence that the recovery in the housing market is now in full swing. "This is now the eleventh consecutive month of positive house price growth and we expect this trend to continue supported by low interest rates and improving economic fundamentals."
The increase in the average purchase price of a first-time buyer was even more pronounced, with an 18,15% increase y/y in April to R626,719 from R530,510 a year earlier.
The ooba statistics also indicated that the average approved bond size increased y/y by 13,1% to R689,613 from R60,690, along with a month-on-month increase of 1,5%, in line with the purchase price growth.
The average deposit as a percentage of purchase price increased 5,3% in April to 21,7% of the total price.
Geffen said the outlook for the housing market remains positive and he expects price growth to remain above inflation for the rest of the year. "The full impact of the recent reduction in interest rates in March is yet to be felt, so we expect the benefit of that decision to be reflected in the coming months."
Meanwhile, an index released by Absa on Friday showed y/y trend growth in the average nominal value of middle-segment housing (small, medium and large houses) for which Absa approved mortgage finance was markedly higher in April this year compared with March.
The weighted average price growth of the three categories of housing came to 13,5% y/y in April, up from a revised 11,8% y/y in March, the index showed.
Home values in the middle segment were up by 6,4% y/y in March compared to 3,9% y/y in February in real terms.
"Base effects contributed to these growth trends as house prices were declining on a y/y basis in all three categories of housing 12 months ago," said sectoral analyst at Absa Retail Bank, Jacques du Toit.
In the category of small houses, the average nominal value was up by a substantial 20% y/y in April, from a revised growth rate of 15,7% y/y registered in the preceding month.
"The significantly stronger y/y growth in the average value of smaller and more affordable housing over the past three months compared with the other two categories, can be ascribed to the fact that many households are still under some financial pressure, while mortgage interest rates are at their lowest levels since mid-1974 and bank's lending criteria are less tight that a year ago," said du Toit.
He added that there were other factors contributing to the stronger growth in the average value of smaller and more affordable houses.
"Rising electricity prices, water tariffs and property rates and taxes, affecting the cost of operating a property, may also be a contributing factor to homebuyers looking at more affordable housing. Some property investors could recently have become more active in the segment for smaller-sized housing."
The average nominal value of medium-sized houses increased by 6,2% y/y in April, after rising by a revised 4,8% y/y in March, which brought the average price in this category of housing to around R979,300 in April. The average real value was down by 0,3% y/y in March.
On large houses, the average nominal value was up by 6,4% y/y in April, marginally higher than the growth rate of 6% recorded in March, bringing the price to about R1,454,400 in nominal terms in April. The value was on average 0,8% higher y/y in March in real terms.
"The housing market is set to recover further in the rest of the year, driven by an expected improved economic performance, the effect of stable but low interest rates, and less tight conditions with regard to credit extension. As a result of base effects, y/y house price growth may slow down in the second half of year from current levels." – Eugene Brink and I-Net Bridge
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