More South Africans applying for 100% home loans

Statistics released by national bond originator, ooba, reflect positive growth in property prices, but at a significantly slower year-on-year growth rate.

With South Africans facing increasing financial strain, Dyer says he recommends home buyers use the services of a bond originator for prequalification before they make an offer on a home.

This is according to Rhys Dyer, ooba CEO, who says the Average Purchase Price in August 2015 increased by 3.4% from R982 297 in August 2014 to R1 015 766. This low single-digit growth is a marked slowdown from the double-digit growth of 11% recorded in the second quarter of 2015.

“This slowdown in housing prices is not surprising given that consumer confidence is at its lowest level in 15 years. This reflects concerns about South Africa’s future, particularly given worse-than-expected Q2 GDP figures, poor economic growth forecasts for the remainder of 2015 and rising interest rates,” says Dyer.

“Self-employed applicants fell to 9% of ooba’s applications received in August, compared to 11% in Q2 2015, reflecting lower business confidence levels.”

The impact of economic concerns is also evident in the first-time buyer’s market, which showed only a 0.9% year-on-year increase in the average purchase price to R761 240.

However, he says activity in the first-time buyer’s market has remained consistent, with more than 53% of ooba’s applications in August coming from this segment.

ooba’s statistics also show that 52% of all home buyers applying for home loan finance in August indicated that they had no access to a deposit, which represents a 4% year-on-year increase in demand for 100% bonds.

“This is further evidence of the financial constraints which South African consumers are facing,” says Dyer.

The slowdown in housing prices coupled with the still positive lending environment could signal a good time to buy property, he says. “Our statistics show that our bond approval rate in August was 3.5% higher, and we recorded further improvement in pricing from banks.”

With South Africans facing increasing financial strain, Dyer says he recommends home buyers use the services of a bond originator for prequalification before they make an offer on a home.

He says ooba’s free prequalification service incorporates a credit check and affordability rating, so when a buyer makes an offer, they can be confident the banks will approve their bond.”