The Q2 2024 oobarometer from ooba Home Loans highlights expected and new trends in the residential property market amid a high-interest-rate environment. Key findings include market outlook, property purchase prices, young homebuyer activity, first-time homebuyer trends, bank approval rates, and investment properties.
The data suggests a steady recovery in the residential property sector, driven by anticipated rate cuts and political stability from the Government of National Unity (GNU). Rhys Dyer, CEO of ooba Group, notes that these factors will boost the market in the coming months.
Despite signs of recovery, real property price growth remains negative due to high inflation. National and first-time homebuyer prices showed slight year-on-year growth (2.3% and 2.7%, respectively) but dipped from the last quarter.
The Western Cape showed the strongest growth, while KwaZulu-Natal saw the largest declines.
While there are some signs of recovery in property prices, the recurring theme in our Q2 ‘24 statistics reveal that real property price growth remains in the negative territory as a result of still elevated inflation,” sayid Dyer, pointing to both the national and first-time homebuyer purchase prices which have both shown marginal nominal price growth year-on-year at 2.3% and 2.7% respectively.
“However, when compared to the last quarter, both the national and first-time homebuyers’ average purchase price has in fact dipped,” said Dyer.
The national average purchase price, now at R1,458,924, has dropped by 1.4% on last quarter while the first-time homebuyers’ average purchase price is down by 1.8% on the last quarter – now at R1,150,238.
Interest from homebuyers aged 18-31 is increasing, with those aged 26-30 showing the strongest annual price growth (4.2%). In contrast, older buyers (37+) are paying less, reflecting financial pressures and a trend towards "buying down."
First-time homebuyers now account for 46% of ooba’s applications, down from previous years. The average purchase price for this group has increased over the past five years, indicating a trend of saving longer before buying.
The Free State had the highest percentage of first-time buyer applications due to lower prices.
Banks have softened deposit requirements, with the national average deposit now at 6.4% of the purchase price. Bank competition remains strong, helping buyers secure better deals. First-time buyers are putting down larger deposits compared to other buyers.
Bank approval rates remain steady, recording only a minor dip year-on-year. “This is an indication that the banks’ lending appetite is still robust, and that homebuyers’ affordability has stabilised with the interest rates remaining unchanged since May 2023,” said Dyer.
The ratio of applications declined by one bank but approved by another is trending slightly lower year-on-year – down from 45% in Q2 ‘23 to 43.7% in Q2 ‘24. However, Dyer reiterates the critical role that companies like ooba Home Loans play in making the dream of homeownership attainable.
Investment property demand is rising, particularly in the Western Cape. Nationally, the percentage of applicants purchasing investment properties reached 12% in Q2 2024, driven by buyers aged 37+ and, notably, those aged 18-25.
Dyer concludes that the positive political outlook and steadfast bank support, along with potential interest rate cuts, will benefit the property sector for the rest of 2024.
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