Whatshot
Bugle Sales Talk Editorial
Bugle Sales Talk Editorial
Date: 2015-07-03
The 2nd Quarter 2015 Estate Agent Survey published by FNB indicates that the level of first time home buying remains strong expressed as a percentage of total home buying, but the trend of increase has been reversed and has shown a declined for the second consecutive quarter. Currently measured at 21% this is down from the peak of 28% of the 2nd quarter of 2014.
An interesting aspect of this survey that has been introduced and measured over the past seven quarters is the "Buyer Panic" level. This refers to the state of mind of aspirant 1st time buyers when they begin to fear that if they don't buy a home quickly, the price levels will rise to levels where property becomes unaffordable for them. This measure of "fear" stood at 44% of all first time buyers in the 2nd quarter of 2015 and significantly up from the 30% measured in early 2014. It is therefore a very real concern for first time buyers and indicates affordability pressures being felt in the market.
Another interesting measure is the level of single status buyers versus buyers who are buying as a couple. As affordability pressures mount, the level of single status buyers tends to decline. This is exactly what has happened recently as the measured single-status buying percentage has declined to 16% in the 2nd quarter from the previous quarters' 17%.
The May 2015 report by SA's leading mortgage originator, Ooba, shows that level of first time buyer mortgage applications that they process has dropped from 56% six months ago to the current 51%. The average age of their first time buyer applicant is 34. Ooba shows that their total approval rate of mortgage applications submitted is currently 75,1%, up from the 72,6% recorded a year ago. This is a lot higher than the approval rate by one bank only, which is presented at 57,9%. It therefore pays to shop around and have a mortgage originator submit your application to several banks. Ooba also shows that the average price for their first time buyer applications is currently R796,261 and that the average bond size is R720,123 or 90,4%. The average deposit required by these first time buyers is therefore R76,138 or 9,6%. The average interest rate achieved for all of Ooba's processed applications in May 2015 was prime (9,25%) plus 0,34%. It is interesting to note that interest rate concessions below the prime interest rate are actually rare and only provided to those clients that can demonstrate an extraordinary level of credit worthiness.
For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.
Andreas Wassenaar
Principal - Seeff Dolphin Coast
Cell: 082 837 9094