‘House prices up in buoyant market’
The upturn in South Africa’s property market that has been evident since December is now beginning to translate into an increase in home price growth‚ BetterBond chief executive Rudi Botha said.
“Our latest statistics show year-onyear growth of 5.3% in the average home price at the end of April‚ compared to 2.62% in January‚ 2.85% in February and 2.94% in March‚” Botha said.
“There is also more buoyancy in the first-time buyers’ market‚ where the year-on-year growth in the average home price was 9.2% at the end of April‚ compared to 6.6% in January‚ 7.3% in February and 7.7% in March.”
This indicated that the market was slowly turning in favour of sellers – as was also suggested by the most recent estate agent survey results from First National Bank, he said.
These show that the average time that a property spends on the market before being sold has dropped from about 17 weeks to 14 weeks.
It also shows that the percentage of sellers being required to drop their price has declined from 95% to 91%‚ and that the percentage by which these sellers are dropping their price has diminished from an average of 10% to 8.2%.
“This turnaround is‚ however‚ not only being driven by greater demand but by the fact that a bigger percentage of home loan applications are being approved now as the banks compete for new bond business.
“Indeed‚ our approval rate has been above 80% for the past four months – which is the highest sustained rate since the 2008-09 recession,” Botha said.
In addition, the percentage of applications being converted to formal grants has risen from a year-on-year average of 63.4% at the end of last year to 64.6%.
“This shows that the banks’ increased willingness to lend is being underpinned by the fact that the financial position of most bond applicants is better than it was last year.
“South African consumers have worked very hard over the past few years to lower their debt‚ curb spending and save more. “By working with reputable bond originators like BetterBond and obtaining pre-qualification‚ prospective homebuyers have also become much more informed about what they can afford‚ and as a result more of those coming into the market now are able to qualify for the home loans they want.”
Rising prices will further encourage the banks.
“But it is important to realise that the picture is not necessarily uniform across South Africa but tends to shift from month to month in different areas‚ so that it can be harder to obtain finance in some regions,” Botha said.
“Our statistics show‚ for example‚ an above average year-on-year price growth of 6.8% in the Western Cape at the end of April‚ and 5.7% in the Eastern Cape‚ but a year-on-year decline of 2.6% in Gauteng.”