Banks are showing an increased appetite to lend according to first quarter (Q1 2018) property statistics recently released by home loan originator Ooba.

“In Q1 2018 we recorded the highest home loan approval rate in the over ten years since the National Credit Act was implemented,” said Rhys Dyer, CEO of Ooba. The group’s total Approval Rate of 76.9% showed an increase of 4.9% over the Q1 2017 approval rate.

Banks’ increased willingness to lend money is fantastic news for the real estate market in South Africa, said Harcourts Africa CEO, Richard Gray.

“These figures are certainly reflected in the market we’re experiencing. This improved lending appetite will play a particularly important role influencing consumer confidence. 

“After the market fluctuations and economic instability of 2017 the stabilisation of 2018 thus far is reinforcing buyer interest and much needed investment activity. The current political climate continues to re-instil hope in the broader economy.”

“Consumers appear to be managing their debt much better and the current low-interest-rate lending environment, coupled with slower growth in property prices means getting a bond for your home is a great deal more affordable now than it was 12 months ago,” said Dyer.

He added that banks are increasingly willing to lend the full value of a property without requiring a deposit.

For Q1 2018, the average deposit for first-time buyers as a percentage of purchase price is 12.5% compared to 14% in Q1 2017.

The average deposit over the entire market also declined by 6.4% year-on-year. “Although it’s technically a buyers’ market, these trends are also positive for homeowners struggling to sell their properties as it increases the pool of potential properties buyers can afford,” Dyer said.

Statistics from Ooba showed the average purchase price is up by only 3.4% from R1 167 242 in Q1 2017 to R1 206 519 in Q2 2018.

The average purchase price of first-time buyers increased by 3.5% to R907,693.

“There are still corners of the market that remain under pressure and will continue to do so, however with the information emanating from ooba’s report, both buyers and sellers are expected to benefit from this improved activity.

“From a holistic perspective we’re definitely dealing with a buyer’s market, yet with banks letting go of the reigns more buyers will enter the market and create greater demand which ultimately leads to a far more beneficial environment for everyone,” said Gray.