After weathering a tough recession, business is starting to pick up for property agents with prices climbing and banks increasing their lending. While some segments of the residential property market remain sluggish, the market for primary residential property is strong, First National Bank said in its latest House Price Index. “Luxury” buying, such as buy-to-let and holiday property, are lagging the recovery as household income remain under pressure. While property agents have been optimistic about the prospects for the buy-to-let market, the numbers tell a different story. Currently, only about 65% of a bond is covered by rental income, meaning buy-to-let remains an unattractive prospect for would-be investors. As property agents are dependent on achieving sales to earn a living – their primary source of income is commission, usually calculated as a percentage of the selling price achieved – increased sales and prices are good news for the industry, which experienced significant job losses since the start of the economic crisis in 2008. FNB’s latest house price index shows house prices are increasing, with year-on-year growth of 8,6% achieved in March, up from February’s growth of 6,2%. This is mainly thanks to a five percentage point cut in interest rates since the end of 2008. The average house price in the index is now R779 546. In addition, banks are increasingly willing to hand out home loans. According to the latest statistics from home loan originator ooba, the average approved bond size showed a year-on-year increase of 13,9% in February, while the average deposit has dropped by 8,9% over the same period. There is an increase in approval rates for applications with deposits, but 100% loans are still hard to come by, ooba says. The increase in the number of applications for 100% loans has warped the statistics slightly, with the decline rate increasing from 50,2% in January to 51,5% in February.
Property Agents Smile as House Prices Start Climbing
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