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Bond applications reached their highest level in three years and bond approvals were at the highest value since October 2008 according to figures released.
The statistics showed that the average number of bond applications in March was 36% higher that the average monthly number of applications in 2010. However, the figures represent just 36% of the applications recorded when the property market was at its peak in May 2007.
Saul Geffen, says that the organisation has experienced consistent month-on-month growth in applications for mortgage finance since the beginning of the current year.
“February was significantly higher and March was even better than that,” he says, adding that expected the number of bond applications to continue increasing over the next few months.
He says that the reduction of interest rates – which have fallen by 650 basis points since 2008 – was certainly a contributory factor. “Interest rates are at a 30-year low and this has improved affordability of homes for thousands of people,” he says.
He points out that the low interest rates, improved affordability, subdued property price rises, low inflation rates and real wage growth combined to create a more favourable environment for homebuyers.
“The relaxation of the lending criteria by some banks has contributed to the rise in applications and approvals because the ability to obtain financing remains one of the biggest drivers for the property market,” he added.
Meanwhile, First National Bank suggest that the South African rental market has remained relatively flat for the first quarter of this year but available data suggests there may be some improvement in the demand for rental accommodation.
Property strategist John Loos says it is difficult to determine the level of rental demand in the current economic cycle but household financial pressure could be a positive factor for the rental market because it could increase the appeal of renting for certain households.
He says that the percentage of home sellers who are looking to downscale – mainly because of financial pressures – remains high at about 22% of the market and many sellers are opting to rent a property rather than buy something at this stage.
Loos says that the average rental for flats in major cities has increased with a year-on-year increase of 16,2% for the fourth quarter of last year.- property24.com
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