Good time for buying property

Residential property prices declined in January 2011, albeit from a solid base following their strong recovery last year. However, according to bond originator ooba conditions are favourable for homebuyers to consider getting onto the property ladder.


Market conditions are now favourable for homebuyers to consider getting onto the property ladder, says ooba.
The latest statistics from the oobarometer price index showed a year-on-year decline in the average purchase price of 6.3% to R797 011 in January 2011 from R850 513 a year earlier. The average purchase price of a first time buyer declined by a modest 1.6% year-on-year to R576 675, from R585 992 a year ago.

According to ooba CEO, Saul Geffen, while residential property prices are coming off their recent highs, the period of deflation is likely to be short lived with expectations for overall flat growth for 2011.

Additional statistics also tracked by ooba show there has been a continued trend by South Africa’s major lenders to ease up on their lending criteria. “Over the last year we have seen the main lenders continue to relax their lending criteria and this has continued in January 2011 with the size of the deposit buyers are required to put down showing a significant decline.”

In January the average deposit as a percentage of the purchase price was also down by 41.8% year on year to R117 396, equivalent to 14.7% of the purchase price. The average initial decline ratio also declined by 4.4% to 46.0% in January 2011 from 50.4% a year ago. There was further positive news in January as the effective approval ratio increased by 6.0% year-on-year to 65.6%.

Geffen says in addition to the improved lending environment, the recent decline in prices presents an ideal bargaining opportunity for new homebuyers. “For those homebuyers who have all their ducks in a row, including a deposit to put down, now could be the perfect time to begin negotiations on a property.”

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