Property values have continued to grow in the past 12 months, with the average home price showing a year-on-year increase of just over 5%, to R971,000 at the end of November. This is according to the latest statistics from mortgage originator, BetterLife Home Loans.
“At the same time the average approved bond size has only increased by 4.6% to R804,000, which means that many buyers are now able to put down bigger deposits in order to secure their home loans,” said BetterLife CEO Shaun Rademeyer. “This is especially the case in the higher price categories where the average deposit now ranges from at least 15% to as much as 40% of the purchase price. Our statistics show, for example, that the average deposit on homes costing R1,5m to R2,5m is R428,000.”
In addition the figures reveal that the percentage of home loan applications that are being declined outright by the banks has dropped sharply in the past year from 30% to 25%, “which all adds up to indicate that prospective buyers generally have their finances in good order at the moment”.
Good for first timers
The BetterLife Home Loans statistics, which represent 25% of all residential mortgage bonds being registered in the various deeds offices, also contain good news for first-time buyers. They show that while the average purchase price paid by first-time buyers rose 3% to R662,000 in the year to end-November, the average approved bond size in that period rose by 4,3% to R617,000.
“This saw the average deposit required by first-time buyers shrink by almost 12% to R45,000,” said Rademeyer. “This is a big boost for those who do not have existing homes to sell in order to help raise cash.
“What is more, some 38% of all home loans granted in the past year were for no-deposit or 100% loans – and most of these went to first-time buyers purchasing in the affordable price range up to around R500,000.”
This is very encouraging, he says, in a market that gets most of it impetus from demand at the lower end, and new owners then moving up the property ladder.
However Rademeyer said that banks are by no means insensitive to the fact that rising living costs and the recent increase in interest rates are making it tougher for consumers to keep up with debt repayments.
“Credit granting criteria are thus likely to be strictly applied next year and prospective buyers may well find that they have to consider cheaper properties in order to qualify for loans. This is likely to put a damper on house price growth.”