Housing market ticks up amid bargain prices and lower cash deposit limits
Latest property industry data suggests there has been a tentative post-election recovery in housing activity as buyers started to take advantage of bargain prices and banks’ increased willingness to lower their cash deposit requirements.
Figures from real estate group RE-MAX show that the number of mortgage loans registered in the deeds office was up 18.5% in the second quarter year on year, from 38,055 to 45,109. The quarterly increase came to 13.2%, up from 39,836 in the first quarter.
FNB’s housing data also points to improved market conditions, with the average time it took to sell a house dropping to 14 weeks and one day in the second quarter, down from the recent peak of 17 weeks and six days in the third quarter of 2018.
FNB economist Siphamandla Mkhwanazi said “time on the market”` is edging closer to the FNB property barometer’s long-term average of 13 weeks and four days. The bank’s survey was introduced in 2004.
He noted that house prices also appeared to be trending up slightly, from 3.3% year on year in May to 3.5% in June.
Mkhwanazi ascribed the uptick in housing activity to improved sentiment following the general election in May and bargain hunters potentially starting to take advantage of softer house prices.
Rhys Dyer, CEO of mortgage originator ooba, said banks have become more competitive on their mortgage-lending terms despite the weak economy, particularly for first-time buyers. He noted that the average deposit paid by first-time homebuyers was 25% lower in the second quarter than the same time in 2018: R86,650 versus R115,378. That equates to 9.2% of ooba’s average purchase price of R942,873.
“Some banks are even prepared to offer home loans exceeding 100% of the purchase price to help buyers cover transfer and bond registration costs,” he said.
The 25 basis points interest rate cut announced by the Reserve Bank in July is expected to provide further support for housing sales over the next months.
Pam Golding Properties CEO Andrew Golding said the rate cut created an opportunity for homebuyers, especially first-time purchasers, to take advantage of current favourably conditions before the market enters a “decisive upturn’’.
There were already signs of a gradual recovery in house prices now that the dust has settled on the election, he said. Pam Golding Properties’ house price index inched up 3.8% in June, with the Western Cape leading the rebound with an average 6.5% price rise.
Jawitz Properties CEO Herschel Jawitz said the 25 basis point rate cut should boost consumer confidence and encourage buyers to cash in on attractive price levels. “The SA housing market currently offers buyers opportunities not seen since the market crashed 11 years ago,’’ he said.