Homebuyers continue to show confidence

The average home purchase price increased by almost 8% in the 12 months to end-July, having risen only 5,8% in the previous 12 months, according to the latest statistics released by BetterLife Home Loans, SA’s biggest mortgage originator*.

These figures also show that the average purchase price is now over R1m for buyers of all ages except those in the 20 to 30 age group, where the average currently stands at R767 000. (See table)

Age group Av p/price in 12 months to Jul 2015 Av p/price in 12 months to Jul 2015 Percentage increase year-on-year Av deposit percentage July 2015 Av deposit percentage July 2016
20 to 30 739 000 767 000 3,8 11,5 11,6
31 to 40 941 000 1,011m 7,4 15,6 18,4
41 to 50 1,107m 1,192m 7,6 21,3 22,7
51 to 60 1,197m 1,404m 17,3 28,1 36,7
Over 60 1,355m 1,595m 17,7 37,8 41,4

House prices and deposit sizes are increasing

“There have been particularly steep increases in the prices being paid by older buyers,” says BetterLife Home Loans CEO Shaun Rademeyer, “These purchasers have also been putting down much higher deposits in the past year. This indicates that they have enough confidence in the market to commit large sums of their own money to a property purchase, and is a good sign for the residential market.

“Meanwhile, buyers in all the other age categories have also been paying bigger deposits over the past 12 months. Mostly this appears to have been in a bid to mitigate the effects of the four interest rate increases that have taken place since July 2015 and keep their monthly bond repayments at affordable levels, but it is nevertheless further good news for real estate as it shows that large numbers of consumers across the board are still committed to home ownership.”

First-time buyers are still unafraid

It is also encouraging, he notes, that first-time buyers, who typically retreat from the market en masse when interest rates start rising, are still responsible at this stage for more than 46% of all home loan applications – and 28% of bond approvals, with the average purchase price currently being paid in this sector of the market standing at R732 000.

“What is more, our statistics show that the average size of a bond approved by the banks has increased over the past 12 months by 5% and now stands at R833 000, while the average size of a bond approved for first-time buyers has increased 4,5% in the same period to R644 000.

“This indicates that lenders also continue to have confidence in the property market, despite the current difficulties it is facing due to the squeeze on consumer affordability.”

Home loan originators the best way to secure a home loan

However, Rademeyer says, prospective buyers need to be aware that the banks are currently operating according to extremely strict credit criteria, because they don’t want to end up in a situation like the one that occurred in 2008/ 09, when they had to repossess thousands of homes from clients who could no longer afford their bond repayments.

“And this is reflected in the fact that more than 50% of all the bond approvals we are securing now are from applications that we have ‘rescued’ after they have been turned down at least once. In other words, this is really not a good time for buyers to try to get approved for a home loan without the assistance of a reputable mortgage originator such as BetterLife Home Loans.”

*The BetterLife Home Loans statistics represent 25% of all residential mortgage bonds being registered in the Deeds Office.

011-516-5500 OR VISIT www.betterlife.co.za/homeloans