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Positive Y/Y House Price Growth in March| News by Staff Reporter
Positive house price growth was recorded in March 2011, indicating a return to normalcy for the property market
South African bond originator ooba (formerly Mortgage SA) said property prices reflected a positive year-on-year growth in March, up 1,1 percent from the previous year.
According to the March 2011 ‘oobarometer price index’ the average house price increased by 1,1 percent, or from R850 864 to R860 492, from March the previous year.
In addition to this, the bond originator also said an increase in the average purchase price amongst first-time buyers had been recorded. From March 2010 to March 2011 growth of 4,5 percent, or from R596 357 to R623 179, was seen in the average purchase price.
While these results are surprisingly positive, CEO of ooba Saul Geffen says the firm will have to see next month whether these figures are an accurate representation.
“Given the high levels of growth experienced in the first half of last year, and the negative growth recorded for the last consecutive four months, we did not expect prices to return to positive territory so quickly,” he said.
“We will have to wait until next month to see whether this is an anomaly or a return to positive price growth.”
ooba said bond applications had increased significantly in March and were on average 36 percent higher than the monthly application intake during 2010. March 2011 saw the highest number of bond applications since May 2008.
Approved bond applications, according to ooba, also saw a record high in March 2011 beating every previous month as far back as October 2008 – two and a half years ago.
The firm said the size of the average approved home loan increased by 7,4 percent in March compared with the same month the previous year (or from R676 256 to R725 973), while the percentage of the purchase price put down as a deposit dropped from 23,9 percent to 15,6 percent over the same period.
Despite the uncertainty cited by ooba as a result of the unexpected figures in March 2011, Geffen said he expected to see house price growth continue to improve over the coming months.
“ooba has experienced consistent month-on-month increases in application intake since the beginning of 2011,” he said.
“February was already significantly up, and March exceeded February by some margin.
“We expect to see this growth continuing.”
Explaining the current trend emerging in the SA property market, Geffen said, “With interest rates currently at a 30-year low, improved affordability has enabled many would-be homeowners to take the leap, as the cost of servicing a bond has reduced considerably.
“The improved affordability, combined with subdued property price growth, low inflation rates and real wage growth, has combined to make this a favourable environment for homebuyers.”