Wednesday, 08 February 2017 17:11

Ooba’s fourth quarter 2016 results show housing market constrained by consumer budgets

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2017 looks to be a challenging year for the South African property market, as quarterly statistics released by ooba, South Africa’s largest bond originator, point to ongoing affordability constraints for South African consumers.


Rhys Dyer, ooba’s CEO says: “With the 2017 Budget Speech just around the corner, South Africa is battling to restore economic growth rates and to balance the books. Against this backdrop, many economists forecast increased personal taxes and increased taxes on consumer goods to be announced in the 2017 Budget to help plug the fiscal gap. This will put further spending pressure on consumers, especially those who are looking to buy property this year.”

The ooba statistics show that from the fourth quarter of 2015 (Q4) to Q4 of 2016 the Average Purchase Price indicated positive nominal growth of 7.1%. However, nominal quarter-on-quarter growth from Q3 to Q4 of 2016 confirms that growth in the property market has slowed significantly

A year-on-year increase of 8.3% for Q4 in the First-time Homebuyer’s Average Purchase Price indicates the ongoing demand for lower-priced entry-level properties.

Says Dyer: “Home Loan lenders have adopted a slightly more cautious lending approach, which is evidenced in the Average Deposit as a Percentage of Purchase Price, which showed a 5.5% increase year-on-year for Q4.

“Quarter-on-quarter, the average deposit of First-time Homebuyers increased by 18%, illustrating the challenges aspiring property buyers have in entering into the property market,” adds Dyer.

Consumer affordability pressure is illustrated by the lower bond approval rates, down 2.7% year-on-year from the fourth quarter of 2015.  Dyer says that lower approval rates are an indication that fewer people are qualifying in terms of affordability for their property of choice.    Average interest rates increased by 10 basis points year on year from 0.28% above prime in Q4 2015 to 0.38% above prime in Q4 2016 - this despite the fact that homebuyers put down greater deposits.  This reflects the increased cost of credit for banks and further impacts affordability for homebuyers.

“Bond originators provide an essential service to any homebuyer looking for a home loan at an affordable rate. We believe our offering is even more relevant in the current recessive economic environment.”

Dyer believes that it is vital that buyers are equipped with the right tools and information before they start looking for a home, to avoid disappointment.  

“Knowing what you can afford upfront, makes the home searching process much less stressful, which is why ooba is launching a free, online, self-service Bond Indicator tool in March to address the need for buyers to have a higher level of financial certainty. 

Despite the more challenging times in the property market, we continue to have one of the highest approval rates in the market and consistently secure bond approvals for over seven out of ten applications we process,” concludes Dyer. 

Last modified on Wednesday, 08 February 2017 17:23

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