According to the latest statistics released by bond originator ooba, residential property prices showed positive year-on-year growth of 6.5 percent in May 2012 (i.e. 0.4 percent growth when taking inflation of 6.1 percent into account), making this the seventh consecutive month ooba has recorded an increase in residential property prices.

According to the May oobarometer price index the average house price rose to R869,088 from R 816,317 a year earlier. The average purchase price amongst first-time buyers also continues to show a significant year-on-year increase of 5.4 percent to R 645,458, from R 612,489 recorded in May 2011.

Saul Geffen, CEO of ooba, says ‘that house prices have continued the positive momentum and it seems to be supported by positive consumer sentiment in the residential market.”

This is also the 13th consecutive month of positive year-on-year property price growth for first-time buyers. The increase in the average purchase price among first-time buyers is linked to the sustained increase in first-time buyer activity. He says that 53.5 percent of ooba’s applications during the month consisted of first-time buyers, which is a 2.6 percent increase in comparison to April’s applications.

According to Geffen, the value of ooba’s home loan approvals for May was up 50 percent year-on-year. May’s approvals were 221 percent up on ooba’s lowest approved loans month being January 2009 but still only 32 percent of its peak month in May 2007.  In addition, ooba’s value of applications in May was 36 percent higher than in April. He says that the number of people applying for home loans is increasing, but is being outpaced by the value of home loans approved given improved lending conditions and competition.

The average approved bond size showed a noteworthy increase of 9 percent to R 737,774 from R 676,562 a year ago, while the average deposit decreased by 11.7 percent to R 131,314, in May 2011. The average deposit for May was equivalent to 15.1 percent of the purchase price.

Geffen says that the initial bank decline ratio increased by 0.8 percent year-on-year to 47.9 percent and that the ratio of applicants declined by one lender, but approved by another lender increased significantly by 6.1 percent to 28.4 percent. He says that this highlights the need for home buyers to shop around.

The effective approval rate in May has increased year-on-year by 2.3 percent to 65.7 percent and ooba’s trailing effective approval rate, which takes into account the loans approved after month end, is 69 percent.