The latest statistics from ooba, South Africa’s biggest bond originator, show the average house price reached R894,510 in January 2013, up 5.2% from R850,589 in January 2012. Month on month, the average house price increased 3.4% from R865,164 in December 2012.
“The property market is gaining confidence and we expect property prices will continue to show positive nominal price growth for the year ahead,” says Rhys Dyer, ooba COO.
First time home buyer activity continues to drive the market, with over 51% of ooba’s applicants in January being first time home buyers. The average house price for first-time buyers was up 5.5% year on year to R686,452 and up 3.2% month on month to R665,167. Despite the high number of first time homebuyers, the average home loan deposit dropped 4.5% year on year and 5.7% month on month to R133,805, representing 15% of the average purchase price.
The average initial bank decline ratio decreased 4.3% year on year to 46.0% in January and the percentage of applications that were declined by one bank but approved by another improved significantly by 5.0% to 25.5%.
“That means one in four applications would have been declined had they not been originated to more than one lender,” says Dyer.
ooba’s effective approval rate, which is the overall percentage of loans approved once ooba has originated the loan to multiple banks, was 65.7% in December, 5.7% up on January 2012, whilst ooba’s trailing approval rate, which takes into account loans approved after month-end, is currently 71.8%.
ooba currently obtains approval for 71% of all home loan applications it processes, which compares favourably with the average bank approval rate of 54% across the major lenders. “These stats show that homebuyers using ooba have on average a 32% better chance of securing home loan approval,” says Dyer.
ooba continues to report record approval rates on top of the record highs set in the last quarter of 2012. The value of home loans approved through ooba in January 2013 is up 44% on January 2012, while December and November 2012 were up 49% and 30% respectively on the prior year.
The market conditions are supported by the lower interest rate environment coupled with subdued property price inflation and improved lending policies, says Dyer. He expects the current environment to persist for 2013.