News
Struggling home buyers can’t afford deposit

15 September 2015

Due to increasing financial constraints on consumers, the percentage of home buyers who have no means of paying a deposit, has increased, bond originator ooba said yesterday.

Property Paradise beach 010

ooba’s statistics also show that 52% of all home buyers applying for home loan finance in August indicated that they had no access to a deposit. It represents a 4% year-on-year increase in demand for 100% bonds.

There has been positive growth in South African house prices, but a significantly slower year-on-year growth rate, according to ooba.

Statistics show the average purchase price in August 2015 increased by 3.4 % from R 982 297 in August 2014 to R 1 015 766.

“Self-employed applicants fell to 9% of ooba’s applications received in August, compared to 11% in the second quarter of 2015. This reflects lower business confidence levels,” said  ooba CEO Rhys Dyer.

He said the impact of economic concerns is also evident in the first-time buyer’s market, which showed only a 0.9% year-on-year increase in the average purchase price to R 761 240.

However, activity in the first-time buyer’s market has remained consistent with more than 53 % of ooba’s applications in August coming from this segment.

Jeffreys Bay  Property for sale

According to John Loos, household and property sector strategist at FNB Home Loans, the most obvious event to which the residential market must surely be responding to at the moment is the mild interest rate hikes that started in January 2014.

“But it probably goes deeper than this. We saw a big drop in second quarter consumer confidence levels, which may have pointed to consumer concerns over events that may yet have to happen.

“And as job security deteriorates in this fragile economic environment, households and consumers become less confident and more cautious.”

He said it is also likely that this deterioration in confidence is likely what estate agents are beginning to experience in terms of “feet through doors”.

Fin 24

View News By Category
News Archive