Second-quarter data published by home loan comparison service, Ooba, shows how the fresh perspective on home and work life brought about by the Covid-19 pandemic has influenced a shift in home-buying patterns.
Recent home-buying trends prioritise quality of life as well as working from home. Properties that offer flexible accommodation, and allow for separate workspaces and additional space for families spending more time at home, are in demand, it said.
With loan repayments on a R1 million home loan down 24% as a result of the 300bps drop in interest rates, buyers are taking the opportunity to buy up, Ooba’s data suggests.
This is evidenced by double-digit growth in the average purchase price of 16.3% year-on-year for the second quarter of 2021 (Q2 21) compared to Q2 20. The average purchase price is at a high of R1,407,071.
Ooba noted that the average purchase price of first-time buyers showed a 10.9% increase over the same period, to an average of R1,104,351.
Rhys Dyer, CEO of Ooba, said: “Despite varying stages of lockdown that continue to wreak havoc on many sectors of the economy, the residential property market continues to surprise with double-digit growth in prices of new home sales.
“We believe this upward growth trajectory will continue as the work-from-home trend becomes entrenched, with many businesses realising the financial benefits of allowing their employees to remain working remotely.”
He said that continued competition among the major banks for a bigger share in the home loans market has translated into higher approval rates as well as more attractive interest rates below prime.
“The appetite of the major banks to offer low or no deposit loans at high loan-to-value ratios and reduced repayment instalments has created an ideal buying environment, particularly for first-time homebuyers,” Dyer said.
Of the home loan applications submitted to Ooba this quarter, it is evident that 100% bonds are very sought after by first-time homebuyers. Currently, 60% of first-time homebuyers acquire property without access to a deposit.
Bank approval rates on 100% bonds for first-time homebuyers remain strong. Just over 80% of Ooba’s first-time buyers seeking a zero-deposit home loan successfully secured bank approval in Q2 21.
“There was not much difference in the volume of mortgage applications received by Ooba in the second quarter when compared to the first quarter of 2021. However, Ooba saw an increase of 12% quarter-on-quarter in finally approved bonds primarily due to the increase in bank approval rates, coupled with an increase in the average bond size,” said Dyer.
The Oobarometer statistics also show that first-time buyer activity peaked in Q3 20 at 54% of all home loan applications received by the group.
In Q2 21, first-time buyer applications dropped to 48%, indicating that existing homeowners are also taking advantage of the low cost of borrowing to upgrade to bigger, more secure or more flexible work-from-home residential properties.
“During the second quarter of 2021, Ooba successfully obtained home loan finance for 82% of its applicants, compared to the single bank approval rate of only 63%.
“Our research also shows that homebuyers who only obtain a single quotation for finance would on average repay their home loan at an interest rate that is 1% higher than if they had used a home loan comparison service to obtain multiple quotes,” said Dyer.