SA home buyers are now paying the smallest deposits in 14 years

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House price growth appears to have stabilised in the last few months.
House price growth appears to have stabilised in the last few months.
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  • The latest FNB Residential Property Barometer shows that national loan-to-price ratio - the proportion of the purchase price that lenders are willing to fund - has increased to 94.9% in the first quarter of 2022.
  • This means buyers are putting down the smallest deposits for new properties in fourteen years.
  • The barometer also shows that house prices have slowed slightly in April.


South African home buyers are currently putting down the smallest deposits to buy a property in about 14 years, according to the latest FNB Residential Property Barometer.

The national loan-to-price ratio - the proportion of the purchase price that lenders are willing to fund - has increased to 94.9% in the first quarter of 2022. (This implies a national deposit or down-payment rate of slightly more than 5%. Deeds office data for all banks - not only for FNB - was used and shows this is the highest the ratio has been since the second quarter of 2008.

"The higher the ratio, the smaller the deposit the buyer has to raise. Generally, the higher the ratio, the more willing lenders are to fund property purchases," explains Siphamandla Mkhwanazi, FNB senior economist.

"This could be because of intensifying competition among lenders, at a time when volumes growth is slowing - although volumes are still running ahead of pre-pandemic levels. I suspect this competition is for customers with good balance sheets, but we have also seen it in affordable markets."

House price growth appears to have stabilised in the last few months as the FNB House Price Index shows growth was slightly lower in April - averaging 3.9% year-on-year - compared to 4.1% in March.

"Bar the sentiment shock from the ongoing geopolitical tensions and devastating floods in some parts of the country, internal market strength indicators suggest relatively resilient market activity in the near term," states the index report.

FNB expects interest rates in SA to increase by a cumulative 150 basis points this year, on the back of rising inflationary pressures, exacerbated by ongoing geopolitical tensions like the war in Ukraine.

The SA Reserve Bank's monetary policy committee (MPC) hiked the repo rate by 25 basis points each in both January and March, bringing the prime rate to 7.75%. The MPC is moving to hike rates in an effort to subdue inflation, which has been heating up in recent months.


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