House price inflation of 2% year-on-year was achieved for Q2 2016 compared to Q2 2015, according to bond originator, ooba. The average first-time buyers’ purchase price fared slightly better, increasing by 2.8% year-on-year.
“The sharpness of the decline in property growth in Q2 20016 is emphasised if one looks back to ooba’s statistics for Q1 2016 when the year-on-year growth of the average purchase price was up by 6.2% from the first quarter of 2015.
“Slowing economic growth, increasing unemployment, escalating inflationary pressure and higher interest rates continue to erode consumer affordability,” said Rhys Dyer, CEO of ooba. “Consumer confidence is at its lowest level in years. With property price growth below consumer price inflation, we expect zero to negative property price growth in real terms for a while to come.”
Black applicants dominate the market
There is a significant increase in the number of black home buyers entering the local residential property market, according to ooba, with 62% of applications received in Q2 2016 by the bond originator coming from black applicants.
“This is a 4% increase on the same period in 2015,” said Dyer. “Similarly, 73% of all applications received from first-time home buyers were from black home buyers compared to 70% in 2015.”
Bond approval lower
Lower bond approval rates, down by 4.5% year-on-year from Q2 2015, also characterise the market, indicating increased housing and mortgage finance affordability pressure on home buyers along with the escalating costs of lending. “The year-on-year increase of 16 basis points in the average interest rate in Q2 2016 illustrates the increased cost of credit,” said Dyer.