Banks' bond war to benefit home buyers

Cape Town - There is strong competition among SA banks to lend to home buyers and this is expected to result a buoyant home loan lending environment in 2018, according to bond originator ooba.

There were indications in the fourth quarter of 2017 that home loan conditions were more favourable, ooba statistics show.

“It appears as if consumers are managing their debt well, with consumer affordability measures still improving off the highs of 2008 and 2009," ooba CEO Rhys Dyer said in a statement on Friday.

In his view, the stronger rand after the ANC presidential election and inflation being well within the target range of the SA Reserve Bank, offer the possibility of an interest rate reduction in early 2018.

"All in all, the early signs are there for a robust year of growth in the property and home loans market,” said Dyer.

Opportunity for buyers

The SA property market currently offers buyers an opportunity to invest before any good news regarding the economic and political landscape start to push property prices up, in his view.

In fact, ooba expects year-on-year property price growth to increase by 6% in the last quarter of 2018, compared to only 1.4% in the fourth quarter of 2016.

“The property market is significantly influenced by sentiment and consumer confidence. Increased political uncertainty, low economic growth and inflationary pressures caused property buyers to ease off on new property purchases during 2017," said Dyer.

"Reduced demand for property forced sellers to adjust their prices to meet the demands of a more cautious buyers’ market, resulting in negative price growth in real terms when inflation is factored in.”

He believes the election of Deputy President Cyril Ramaphosa as president of the ANC has created a more investor-friendly political and economic environment.

“We hope the economic policy uncertainty that has challenged the SA economy for the past few years will stabilise. We expect the new ANC leadership to deliver improved policy certainty during 2018. If this happens, consumer sentiment will recuperate and boost demand in the property market," he said.

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