Slight growth in house prices

2011-07-18 11:39

House prices grew marginally in June compared to the same month last year, according to bond originator Ooba today.

“The June Oobarometer price index reveals that the average house price rose one percent year-on-year to R845 725 from R837 599 a year earlier,” Ooba CEO Saul Geffen said in a statement.

The increase followed two months of year-on-year decreases in local house prices.

Growth in the average purchase price for first time buyers increased slightly, with year-on-year growth of 1.1% to R618 084 in June this year from R611 611 a year earlier.

The average approved bond size grew year-on-year to 6.1% at R737 457 from R694 759 a year earlier.
Geffen said the value of approved bonds for Ooba reached a three-year high in June this year.

“We have experienced a growth of 51.9% in the value of approved home loans in the last quarter in comparison to same period in 2010,” he said.

“However, the volume of approved loans in June were still only 25% of the approved loans recorded at the peak of the market in May 2007.”

Geffen attributed the improved property market conditions to the current low interest rate environment.

“The record low interest rates, coupled with subdued property price inflation, increased bank approval rates and lower deposit requirements has resulted in an influx of applications by potential homeowners.”

Major lenders had also relaxed their lending criteria.

“The effective approval rate has increased to 63.9% in June 2011, up from the lowest effective approval rate of 55.6% recorded in May 2010,” he said.

This was still well below Ooba’s peak approval rate of 81% in May 2007, he said.

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