The average purchase price for a house in South Africa right now – and bank lending behaviour

Home loan approval rates were up by 3.1% from Q4 of 2020 and the average interest rate received by home applicants was prime less 0.21% .

“Our statistics also show that second-time home buyers who, unlike first-time buyers, have access to a deposit are enjoying even more favourable rate discounts. During 2021 the average interest rate achieved in this segment was prime less 0.42%. These statistics show that banks are pricing more affordably, which improves approval rates from banks.”

During the same time period, Ooba said the average bond size increased by 5.5% while the average deposit as a percentage of the purchase price fell by 23.9%, indicating the willingness of banks to offer home loans with more favourable conditions. “Whilst property price growth in the Western Cape and North West Gauteng have moderated, our statistics show that the demand for luxury properties above R3 million has increased. 22% of Ooba’s granted home loans during 2021 fell into this luxury market, which is a growth of almost 7% since the cost of borrowing dropped significantly in May 20.

“Even at a prime lending rate of 8%, we are still well below the level of 10% that existed when we entered into the pandemic in early 2020. We thus expect the demand for new home loans to reduce by approximately 5% to 8% in 2022 compared to the record high volumes in 2021. We envisage an average purchase price growth of about 3% to 4% for 2022,” he said.

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