The residential property market in South Africa has been facing challenges but shows signs of a gradual turnaround.
In the first quarter of 2024, the oobarometer indicates that the extended period of high interest rates has affected the volume of home loan applications processed by ooba Home Loans.
Rhys Dyer, CEO of the ooba Group, remains optimistic, stating, “Resilient South Africans are likely to benefit from anticipated rate cuts towards the end of 2024.”
Comparing Q1 ’24 with previous years, there’s a notable decline in the volume of home loan applications processed. However, there’s a modest uptick compared to the previous quarter, indicating increased activity in the market.
Additionally, the average property prices sourced through ooba have shown a positive trend, with a year-on-year increase of 3.1% across various property categories. Both first-time buyers and the national average witnessed a growth of 4.8% in the last quarter.
Dyer highlights a shift in the price range of applications, with more applications falling within the higher price band of over R1.5 million. This contrasts with a decrease in activity in the lower price range, as indicated by ooba’s data over the past five years.
Despite economic fluctuations, bank approval rates remain steady at 83.4% in Q1 ’24, indicating sustained lending appetites from banks and stabilized financial standings of buyers over the past year.
Although there’s a slight increase in installment percentages, it remains comfortably below the industry benchmark, suggesting that home loan applications are not overly financially strained.
Dyer emphasizes the role of bond originators in sourcing financing options from multiple banks, evident in the increased ratio of applications declined by one bank but approved by another.
Furthermore, banks are offering attractive discounts on prime rates, making finance more accessible and contributing to improved affordability.
Looking ahead, Dyer believes that the residential property market is on the verge of better times, with anticipated rate cuts, competitive property prices, and elevated bank approval rates making it an opportune moment for prospective buyers to enter the market.
