{"id":706760,"date":"2023-07-25T17:30:00","date_gmt":"2023-07-25T15:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=706760"},"modified":"2023-07-25T16:56:14","modified_gmt":"2023-07-25T14:56:14","slug":"good-news-for-homebuyers-in-south-africa-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/706760\/good-news-for-homebuyers-in-south-africa-2\/","title":{"rendered":"Good news for homebuyers in South Africa"},"content":{"rendered":"\n

Despite adverse economic conditions weighing down on the property market in South Africa, Banks\u2019 approval rates remain high while the average property price has seen a slight decline, which is good news for homebuyers \u2013 especially prospective first-time homeowners.<\/p>\n\n\n\n

According to the Q2 2023 oobarometer: Home Loan Statistics released by ooba Home Loans, as expected, property sales have slowed due to the high interest rate environment and challenging economic conditions.<\/p>\n\n\n\n

The data shows a 25% decline in the volume of home loan applications year-on-year (from Q2 2022 to Q2 2023) and by a further 30% from the high noted in Q3 2021 when the prime lending rate was at a historical low of 7%.<\/p>\n\n\n

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Property price growth muted<\/strong><\/p>\n\n\n\n

The average price that ooba Home Loans customers are paying for property remains in negative territory, with the average purchase price for Q2 2023 down by -0.4% from Q2 2022 \u2013 from R1,431,712 to R1,426,656). <\/p>\n\n\n\n

The average purchase price recorded for first-time homebuyers in Q2 2023 was R1,120,173. This is down 2.6% from the R1,150,256 in Q2 2022. \u00a0<\/p>\n\n\n\n

\u201cThis is in reaction to the rapid rise in interest rates – which climbed 475 basis points since the start of the rates hike cycle in November 2021, resulting in weakening demand for property,\u201d said Rhys Dyer, CEO of ooba Home Loans.<\/p>\n\n\n

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While the property price decline is good news for new homebuyers, he added that an end to the current interest rate hiking cycle is needed to stimulate renewed demand for residential property and stabilise the market.<\/p>\n\n\n\n

\u201cThe recent decision by the South African Reserve Bank to leave the interest rate unchanged is great news for the property sector, with an expectation that we have reached the top of the cycle and that the next interest rate movement will be downwards.\u201d<\/p>\n\n\n\n

Banks are lending <\/strong><\/p>\n\n\n\n

Despite this dampener on the market, this has not influenced the willingness of banks to continue to lend competitively.<\/p>\n\n\n\n

\u201cBanks continue to compete for homebuyers, as evidenced by a steady average successful approval rate. Customers continue to benefit from a high approval rate of 82.8% – unchanged from Q2 2022,\u201d said ooba.<\/p>\n\n\n\n

In addition, the approval rate for 100% loans is stabilising to just above 80% – rising to 81.9% in June 2023 from 80.2% in May 2023. <\/p>\n\n\n\n

\u201cThis removes some of the barriers to entry for homebuyers \u2013 particularly first-time homebuyers – who cannot afford to put down a deposit,\u201d said Dyer.<\/p>\n\n\n\n

\u201cDeposits now make up 9.6% of the average purchase price (R107,917) for first-time homebuyers \u2013 a staggering 15.2% increase year-on-year.\u201d<\/p>\n\n\n

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However, it\u2019s interesting to note that the number of people declined by the first bank they applied to increased slightly from 33.6% in Q1 2023 to 34.6% in Q2 2023.  <\/p>\n\n\n\n

\u201cThis is the effects of high interest rates coupled with the rising cost of living on applicants\u2019 affordability profiles. Despite this, approval rates remain higher than the previous quarter, highlighting the critical importance of receiving quotes from several banks when applying for a home loan,\u201d said Dyer.<\/p>\n\n\n\n

\u201cBanks are still lending, which should come as a confidence booster to many of us,\u201d he added. \u201cWe are at the peak of the interest rate cycle, which means that the homebuyers who can afford a home loan at the current interest rate are a good risk going forward\u201d.<\/p>\n\n\n\n

Outlook<\/strong><\/p>\n\n\n\n

The decision not to increase interest rates further this month is a great message for the property market. However, Dyer envisages that activity in South Africa\u2019s housing market will likely remain subdued until there is a shift to an interest rate-cutting cycle.  <\/p>\n\n\n\n

\u201cWe anticipate below-average demand and modest property price growth in the short term. Weaker home-buying activity will support the investor market as the demand for rental properties increases,\u201d he said.<\/p>\n\n\n\n

He also noted that approval rates and the current level of interest rate discounts should hold steady whilst banks continue to compete for good-quality home loans amongst a smaller pool of buyers.<\/p>\n\n\n\n

\u201cThe best avenue for serious buyers is to shop around and negotiate the best deal on a home loan. With more affordable property prices and banks offering home loans on favourable terms, this could be one of the best times to purchase property,\u201d he added.<\/p>\n\n\n\n

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Read: Some of the hottest property markets in South Africa right now<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Although the economy in South Africa is under pressure, there are encouraging developments for those looking to buy a home, particularly for those who are purchasing for the first time.<\/p>\n","protected":false},"author":10,"featured_media":665179,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12755],"tags":[5829,18302,853],"class_list":["post-706760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property","tag-ooba","tag-property-market","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/706760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=706760"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/706760\/revisions"}],"predecessor-version":[{"id":706830,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/706760\/revisions\/706830"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/665179"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=706760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=706760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=706760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}