ooba index confirms fall in house prices 
07 Aug 2008

Ooba, SA’s largest bond orginator, which has a market share of 25%, said its index, called the Oobarometer, showed the average price of a property acquired last month was R782385, down 1,9% from July last year, when the average price was R798300.

Saul Geffen, CE of Ooba, formerly MortgageSA, said the fact that prices were dropping was “the key take-out” from the index. “The percentage is still small, at just under 2% decline, but it does point to a trend. We do expect further price declines. There is incredible pressure on the property market, namely due to affordability and negative sentiment,” said Geffen.

He said at the moment there was more property stock on the market and sellers were trying to hold out for higher prices.  Yet buyers had priced in property at well below sellers’ asking prices. Last month’s Oobarometer showed the average interest rate concession to prime interest rates was 1,21% last month compared with the 1,29% in July last year.

Geffen said deposits had also risen “strongly”, with a 25% increase in the past month alone “reflecting the significant shift in banks’ lending criteria requiring substantially greater deposits from home buyers”. The average deposit as a percentage of purchase prices was 18,1% last month, meaning that buyers were now putting down an extra 5% deposit compared with a year ago.
Geffen said the average home loan decline ratio last month was 51,1%, which was a major increase from the just below 40% in the same month last year.

He said the average decline ratio was the average of all home loan applications initially turned down by banks. “However, when an application is rejected by one bank, it is often approved by another,” Geffen said.

Nick Wilson,  www.businessday.co.za