AA - 2021

Author:  Rhus Dyer
Chief Executive of Ooba
23 April 2021

Home loan data shows ‘astonishing’ shift in South Africa’s property market 

Home loan comparison service Ooba has published its statistics for Q1 2021, showing a significant rebound in the residential property sector after a year dominated by the Covid-19 pandemic and the ensuing economic fallout.

The data shows that the average purchase price in South Africa increased by 13.8% in Q1 2021 compared to Q1 20. The average purchase price of first-time buyers showed a 15.1% increase over the same period.

During Q1 2020, South Africa had just entered its first hard lockdown. At the time, property prices were experiencing a negative growth slump and the future was uncertain, with estate agencies across the country unable to operate, said Rhys Dyer, chief executive of Ooba.

“The paradox of double-digit property price growth recorded for residential property amidst a global pandemic coupled with the worst global and local economic downturn since the global financial crisis of 2008 is astonishing.”

Dyer said that in the space of a year, buyers have substantially changed their criteria for an ideal home. Initial lockdowns forced a major portion of the workforce as well as scholars and students to work or study from home, he said.

“For a large proportion of the population this has become a semi-permanent or permanent arrangement. Consequently, buyers are prioritising quality of life and new ways of working when purchasing a home.”

Dyer said that properties that feature separate workspaces, reliable internet connectivity and more space for families spending more time at home are in demand. Buyers are finding bigger properties at better value for money in suburbs outside of the main CBD, he said.

“Areas that were once viewed as potential holiday home destinations are now more sought after as permanent residences as opportunities to work and study remotely while enjoying a better lifestyle have increased.

“Homes in sought-after areas that are competitively priced are selling relatively quickly, even at the top end,” said Dyer.

Lending shifts

The unprecedented low cost of borrowing coupled with the major banks’ appetite to take on low or no deposit loans have created an ideal buying environment, particularly for first-time buyers, said Dyer.

During the first quarter of 2021, Ooba said that it successfully obtained home loan finance for 80.7% of its applicants, 61% of whom required a zero-deposit loan. Q1 2021’s approval rate across first-time buyers who required a zero-deposit loan was 79.3%.

“Property ownership is now more accessible to aspirant first-time buyers who previously could only afford to rent. Potentially renters may be able to buy a home at a lower monthly cost than their current rental payment,” said Dyer.

Compared to Q1 of 2020 the average approved bond size increased by 13.3%, while the average approved bond size for first-time homebuyers increased by 14.8%.

The average interest rate which Ooba achieved in Q1 2021 for its successful home loan applicants was prime less 0.05%, 2 basis points cheaper than Q1 2020’s prime less 0.03%.

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