Year-on-year price growth at the end of April in the first-time buyer segment was down 0.68% (from 5.06% to 4,38%); overall across the market, the year-on-year price growth was 5,02% at the end of April, compared to 6,97% at the end of April 2016.
This is according to statistics by bond originator, BetterLife Home Loans which said that affordability is also likely to improve further as salary and wage increases this year run ahead of house price growth.
“The latest forecasts are that salaries will increase by between 6% and 7.5% in nominal terms this year – or by up to 1.5% after-inflation,” said Shaun Rademeyer, CEO of BetterLife Home Loans. “What is more, those who are following the crowd now, and are in the process of selling, are aware that they have more competition in the marketplace and are generally more willing to negotiate, meaning that buyers can often secure even better pricing.”
Despite consumers having decreased the amount they spend each month on debt repayment, according to the latest Momentum/Unisa Household Wealth Index – which said the average household currently spends 21% of gross income on debt repayment – home loans are going to become significantly harder to obtain.
“The banks will naturally become increasingly cautious about extending any kind of credit as the effects of the ratings downgrade become more evident, and in fact are already starting to apply stricter loan qualification criteria,” said Rademeyer, noting that he believes there is a six-month window of optimum buying opportunity – especially for first-time buyers. “According to BetterLife statistics there is still a very healthy demand for first-time home ownership, with the percentage of home loan applications coming from first-time buyers having increased by 2% year-on-year at the end of April to 47.25%; and first-time buyers still accounting for 36% of all formally granted home loans.”