According to the oobarometer price index released by ooba, South Africa’s leading bond originator, negative year-on-year price growth of 1.1 percent (-6.8 percent when taking inflation into account) to R 823 476 was recorded in October 2011, down from R 832 705 in October 2010. However, the average first-time buyer's purchase price increased by 4.1 percent to R 625 483, while the average bank decline ratio decreased by 1.30 percent in October to 44.4 percent.
According to Saul Geffen, CEO of ooba, property prices have continued to drift sideways, tending towards slight negative nominal price growth for the last two quarters.
Geffen says that the average first time buyer’s purchase price has seen consistent growth over the past six months, which he attributes to the sustained lower interest rates, combined with the ongoing easing in lending conditions. "The proportion of first time buyers as a percentage of total applications continued to rise, increasing to 52.71 percent, up from 52.0 percent in September 2011 and 47.63 percent in October 2010."
He says that rising housing costs and increased municipal and utilities tariffs are causing many home buyers to opt for smaller, more cost effective houses, which is shifting the mix of properties in the price index and it may therefore not be an apples to apples comparison. "The rising costs of home ownership and the changing economic and racial demographics amongst home buyers are influencing demand at the lower to middle end of the housing market."
The oobarometer also revealed that the average deposit size decreased by 1.1 percent in October. The average deposit is now equivalent to 18.1 percent of the purchase price or R149 089.
The average approved bond size dropped slightly in October by 0.9 percent to R674 387, from R680 455 a year earlier.