After a yr of the Covid-19 pandemic, Ooba has noticed modifications in each shopper behaviour and lending developments, leading to a shocking increase within the native residential property market.
Rhys Dyer, chief government officer of Ooba, predicts that the residential property market in 2021 will proceed to indicate robust ranges of exercise, largely pushed by first-time homebuyers on account of the low rates of interest.
Proof of the robust exercise, he mentioned, could be seen within the quantity of Ooba’s house mortgage functions for This autumn 20, which elevated by 36% in comparison with This autumn 19, with a 56% development within the worth of the functions acquired.
Functions from first-time patrons in This autumn 20 had been up by 36% in comparison with This autumn 19, with a 59% improve within the worth development. The worth of Ooba’s bond directions to attorneys in This autumn 20 was 56% up on This autumn 19.
“The present low rate of interest atmosphere, in addition to aggressive house mortgage offers from the banks, creates a great shopping for atmosphere for first-time homebuyers.
“Banks in This autumn 20 had been ready to offer 100% house loans to a big share of first time house purchaser candidates. 100% bond functions from first-time homebuyers in This autumn 20 elevated by 39% year-on-year with 80% of those patrons efficiently acquiring finance,” mentioned Dyer.
People who presently hire property can in a big share of circumstances buy their first property at a decrease month-to-month value than their present rental fee, he added.
In keeping with Dyer, the urge for food for banks to lend, particularly at excessive loan-to-value’s (LTV’s), will drive the demand facet of the market, particularly for first-time homebuyers. Nevertheless, ongoing Covid-19 interruptions to sure enterprise sectors imply banks will likely be watching the financial drivers intently.
Ooba’s knowledge present that throughout the fourth quarter of 2020, the Common Bond Dimension elevated by 13.7% whereas the Common Deposit as a Proportion of the Buy Worth fell by 15.6%.
Likewise, the Common Bond for first-time homebuyers grew by 15.5% whereas the Common Deposit was down by 16.3%. On-going assist from banks to proceed to lend with no or very low deposit necessities proceed to maintain sturdy property market exercise.
“The majority of residential property exercise will likely be at value factors that first-time homebuyers can afford. We count on robust curiosity in properties priced between R500,000 and R2 million,” mentioned Dyer.
“Nevertheless, this development in demand will possible end in some inventory shortages throughout the yr, which is able to drive up the costs of second-hand properties on this section. We anticipate a rise in new property developments to enhance the stock, making extra inexpensive houses available for purchase.”
He mentioned that exercise within the luxurious and high-end property market is anticipated to stay subdued. “Sluggish financial development coupled with low confidence within the economic system, is encouraging wealthier South Africans to restrict their publicity to the native property market.”
With no speedy finish in sight to the pandemic, patrons are prioritising their high quality of life and new methods of working when buying a house. More room, a much bigger backyard and a house workplace are in demand. This will imply bigger properties barely farther from the CBD could achieve extra attraction, mentioned Ooba.
The fourth quarter statistics from Ooba present that the Common Buy Worth elevated by 11.7% year-on-year reaching R1,349,337. The Common Buy Worth for first-time patrons fared even higher, with a 13.7% improve, breaching the million-rand mark at R1,089,443.
Annual value development has been pushed by improved affordability as a result of decrease borrowing prices, coupled with the demand for bigger, costlier freehold properties.
The present constrained provide of properties on the market ensuing from the heightened property market exercise within the latter half of 2020 can also be inserting upward stress on property costs within the cheaper price section of the market.
“Our statistics present that the profitable bond approval price in the event you solely apply for finance to a single financial institution is 59.7%, down 9.3% year-on-year.
“Throughout This autumn 2020, simply over 80% of Ooba’s house mortgage candidates efficiently secured bond approvals at a median rate of interest of 0.02% under prime, underscoring the worth of our house mortgage comparability providers,” mentioned Dyer.