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New stats reveal SA property’s ‘hidden’ strength and resilience

29 Nov 2018

The latest statistics from national bond originator BetterBond provide the strongest indicator yet that the residential real estate market is in much better shape than most people think - and that the impetus is coming from the ‘affordable’ sector.

Botha says the increase in the number of transactions confirms continued growth in the appetite for homeownership among South African consumers.

“It may be more difficult to achieve home sales and prices may not be rising as fast as one would like, but the fact is that both the number and the value of transactions were up in all the major centres we monitor during the six months to end-September when compared to the same period of 2017,” says BetterBond CEO Rudi Botha.

“And while an increase in value could just be attributed to higher home prices, the increase in the number of transactions confirms continued growth in the appetite for homeownership among SA consumers, which is very encouraging indeed considering the VAT, fuel price and municipal tariff hikes they have had to deal with in the past 12 months.”

Read: Home loans are now more affordable than in 2017

Botha says the figures show, for example, that in the Johannesburg Southeast region, the total number of bonded transfers of ownership registered in the Deeds Office between April and end-September this year was 10.9% higher than in the same period of 2017 - and that the increase was even higher in the Free State and Northern Cape region. See table:

Rise in number and value of bonded transfers from April to September 2018 versus April to September 2017:
Region Percentage difference in number of bonded transfers Percentage difference in value of bonded transfers
Eastern Cape +3.66 +9.85

Free State/Northern Cape

+16.4 +22.24
KwaZulu-Natal +8.73 +21.28
Western Cape +3.15 +1.78
Greater Pretoria +4.05 +9.76
Johannesburg Northwest +4.61 +9.16
Johannesburg Southeast +10.9 +16.22

Source: BetterBond and Lightstone

What is more, Botha says bonded transfers actually represented only 45% of all transfers that took place between April and September this year, with the rest being transfers as a result of cash purchases. But when it came to value, bonded transfers accounted for some 60% of the total.

“In other words, 55% of buyers currently are cash buyers whose transfers are only worth 40% of the total value - and that indicates a large number of buyers who are acquiring lower-priced properties for cash.”

Statistics compiled for BetterBond by independent property data company Lightstone show that in real terms, the total number of transfers registered in the Deeds Office during the second and third quarters of this year was just over 135 000, with a total value of just over R125 billion. This means that about 75 000 buyers put R50 billion of their own money into real estate during that period.

“At the same time, our own stats show that the banks are continuing to back this market strongly, with our bond approval ratio currently running at 83% and the actual number of bond approvals up 5.5% in the 12 months to end-October compared to the previous 12 months,” says Botha.

“In addition, the total value of bond approvals showed year-on-year growth of 14% at end-October, reflecting more lenient deposit requirements that make it easier, especially for first-time buyers, to gain access to the market. Nevertheless, we continue to advocate that all home buyers who need a bond - and especially those at the lower end of the market, should try to save up as large a deposit as possible.”

The reason, he says, is that owners with deposits can expect more competitive interest rates and thus significant savings over the lifetime of their bonds.

“For example, the average variation between the best and worst rate offered on a bond application is currently around 0.5%, and on a 20-year loan of R1.5 million, this translates into potential savings of R6 000 a year off your home loan instalments, and more than R120 000 worth of interest over the lifetime of the loan. We think that’s worth saving for.”

Read: Pay 0.5% less on your home loan interest rate, see what you'll save

Also read:

4 pitfalls to avoid on your way to a great credit score

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