South African Property Market Receives Vote of Confidence By Repeat Property Buyers
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The property market has received a vote of confidence from the majority of current home buyers (52%) who are repeat buyers and re-investing the proceeds of their own sales.
According to Shaun Rademeyer, BetterBond’s statistics show a 4% year-on-year increase in the household income of the average repeat buyer at end-September to R56 000, and a 5% year-on-year increase in the household income of the average first-time buyer to R37 000.
This accords with the BankservAfrica Salaries Index, which shows that real (after inflation) salaries in SA increased by 1,1% in August – which was the sixth consecutive month of growth.
The underlying strength in the market is further evidenced, Rademeyer says, by the fact that the percentage of loans formally granted has risen over the past year from 59,2% to 61,4% of applications, with both repeat and first-time buyers displaying an increased determination to proceed with their purchases in spite of SA’s current socio-economic problems.
“However, while the average approved bond size showed a year-on-year increase of 5,2% at end-September to R886 000, the average home price paid increased by just 2,8% to R1,1m. Similarly in the first-time buyer sector, the average approved bond size increased by 4,7% to R680 000, while the average home price paid increased by only 3,9%“.
“This suggests that there is still strong downward pressure on prices, and that is confirmed by an analysis of the number of home loans being granted in each price category.”
The statistics show that in the past twelve months, the number of loans granted for more than R1,5m increased by just one percentage point to 21,4%, while the majority of loans continued to be granted in the R500 000 to R1m purchase price range (39,5%) and the R1m to R1,5m range (17,5%).
“In addition, the banks continue to apply very strict criteria when it comes to granting new credit and to evaluating properties for home loan purposes, and consumers who apply for home loans without the assistance of originators are struggling to obtain approvals even when they are in good financial shape“.
Author: Property Wheel