Index shows 'rise in house prices'

In a statement on Friday, home loan originator ooba, formerly known as MortgageSA, said that its October oobarometer price index had shown a rise in year-on-year house prices of 9.9 percent.

"This is the fifth consecutive month that the oobarometer has shown a rise in house prices and it is the biggest increase within that period," said chief executive Saul Geffen.

The average purchase price according to the oobarometer was R820 885 in October 2009 compared to R746 654 in October 2008.

The month-on-month purchase price also showed a nominal increase of 1.8 percent from R806 494 in September this year.

The average purchase price for first time buyers had also shown a large year-on-year increase of 10.7 percent and a month-on-month increase of 3.7 percent.

"The drop in interest rates and banks loosening their lending criteria, has also positively affected the affordability of first time buyers and we are seeing an increase in activity from first time buyers," Geffen said.

The year-on-year average approved bond size increased by 8.9 percent from R636 339 in October 2008 to R693 008 in October 2009.

The average deposit as a percentage of purchase price had increased slightly in October, to 15.6 percent compared to 12.5 percent in September, but was still considerably lower than the 23.1 percent in August 2009, ooba said.

"The change to lower deposits is a permanent shift as a result of relaxed bank requirements, however the changing mix of business will continue to fluctuate the monthly data for some time."

The average bank decline ratio was slightly up at 49.6 percent, compared to 48.4 percent in September.

"This slightly higher decline rate should be understood in the context of the significant increases in application volumes, rather than increases in bank rejections," Geffen said.

"Despite lenders having generally increased approval rates, a higher proportion of applications are now not being approved due to an increase in the proportion of marginal applicants who are trying to take advantage of the improved lending environment, particularly 100 percent loans which have stricter criteria to fulfil," he added.

The oobarometer found that 18.6 percent of applications which were initially declined in October were subsequently approved by another lender, which was marginally lower than September's ratio of 19.5 percent.

"This should also be seen in the context of the increased application volumes," Geffen said.

"The outlook for the property market is positive, with all important drivers such as increased application volumes, increased approvals, further relaxation of bank lending criteria and increased competitiveness amongst lenders indicating that the improvement in the market will be sustained," he added.

Sapa

Posted at 08:35AM Nov 13, 2009 by Editor in Home Loans  |