Property prices in South Africa may well still be going up, but they are increasing at a slower rate than before.
The latest statistics released by ooba reveal that there has been a year-on-year growth of 5.7 percent in the average house price in the third quarter of this year. The average house purchase reached a high of R1,022,519 during this time as opposed to R967,108 during the same period in 2014. This is off the back of an 11 percent year-on-year growth in the second quarter of 2015.
The stats also show that the demand for property still outstrips supply, which is good news for sellers as this bodes well for continued growth in house prices.
It does appear, however it seems as though deposits are still an issue with a large proportion of buyers.
Rhys Dyer, CEO of Ooba notes that of all the applications received in the third quarter, 52 percent were from buyers who didn't have access to funds for a deposit. This, he said, was up from 49% during the same period last year. The impact of the shift resulted in the average deposit dropping to 12.1 percent. "Despite the lower average deposits, the average interest rate dropped from 0.55% above prime in the third quarter of 2014 to 0.32% above prime in the third quarter of 2015." This, he says, points to increased competition among lenders for new home loan customers.
Other buyer trends have also come to the fore. First time buyers are dominating at the moment and 53 percent of all applications received by ooba in the third quarter of this year were from this sector, this is up by one percent up from the second quarter.
The self employed appear to be holding back in making a buying decision and only 10 percent of applications received comprised self employed individuals, compared to 11 percent in the second quarter of this year. "This is far off the 20% level experienced in 2007, indicating that self-employed applicants are less confident about their ability to qualify for finance," says Dyer.
The second home and buy-to let segments of the market still don't appear to be performing that well. A total of 95 percent of applications received in the third quarter were for the purchase of primary residences. While this is unchanged from the second quarter, it is one percent up on the third quarters figures from last year.
The demand for sectional title properties is growing. ooba puts this down to affordability, lower maintenance coasts and security reasons. Thirty two percent of those applying for a bond were purchasing a sectional title unit - this figure is two percent higher than the one recorded during the same time last year.