The average purchase price between Q4 2015 and Q4 2016 showed positive nominal (including consumer price inflation) growth of 7.1%; while nominal quarter-on-quarter growth from Q3 to Q4 2016 confirms that growth in the property market has slowed significantly.
This is according to Rhys Dyer, bond originator ooba CEO, who said a year-on-year increase of 8.3% for Q4 in the first-time homebuyer’s average purchase price indicates ongoing demand for lower-priced, entry-level properties.
“Home loan lenders have adopted a slightly more cautious lending approach, which is evidenced in the average deposit as a percentage of purchase price, which showed a 5.5% increase year-on-year for Q4,” said Dyer. “Quarter on quarter, the average deposit of first-time home buyers increased by 18%, illustrating the challenges aspiring property buyers have in entering into the property market.”
Consumer affordability pressure is blamed for lower bond approval rates, which dipped 2.7% year-on-year from Q4 2015 to Q4 2016.
“Lower approval rates are an indication that fewer people are qualifying in terms of affordability for their property of choice,” he said, noting that average interest rates increased by 10 basis points year on year from 0.28% above prime in Q4 2015 to 0.38% above prime in Q4 2016. “This is despite the fact that home buyers put down greater deposits. It reflects the increased cost of credit for banks and further impacts affordability for home buyers.”
Full oobarometer analysis
(Oct – Dec 2016)
(Oct – Dec 2015)
(Quarter 4 2016 vs
Quarter 4 2015)
|Average Purchase Price||R1,161,332||R1,084,311||7.1%|
|Average Approved Bond Size||82.6%
|Average Deposit (as % of purchase price)||17.4%
|Average Purchase Price of First-time buyer||R888,468||R820,447||8.3%|
|Average Approved Bond Size of First-time Buyer||84.9%
|Average Deposit of First-time Buyer (as % of purchase price)||15.1%
|Average age of applicant||38||38||No Change|
|Additional Successful Bond Approval Rate by Multiple Banks||31.0%||32.7%||-1.7%|
|Successful Bond Approval Rate by One Bank||53.1%||55.8%||-2.7%|
|Total ooba Approval Rate||72.4%||73.8%||-1.4%|
|Average Interest Rate||0.38%||0.28%||0.10%|