NOW REALLY IS THE TIME

Buyers and, indeed, renters, who previously could not afford a property, are entering today's market for the first time. It's no flash in the pan, as interest rates remain the lowest in decades, and bond originator ooba Home Loans recorded an increase of in excess of 50% in the value of home loans granted, reaching the highest levels in 13 years

At Wakefields, not only is first-time home ownership on the up and up, but the lower to mid end niche of most suburbs is experiencing stock shortages. "That's a clear indication of high demand," says Myles Wakefield, CEO of Wakefields Real Estate. "The impact of the record low interest rates continues to drive demand all through the province."

Rhys Dyer is CEO of ooba Home Loans. The home loan market is a strong indicator of, in this case, the very good health of the property market: "The demand and volume of home loan applications is still very strong, well over 40% up on the prior year," says Dyer. Those are telling figures given the times we're living in. He adds, "There's currently a huge buzz around whether it is better to buy or rent a home. Unlike other 'flash in the pan' trends, the time to purchase a home is right now. For those with leases coming up for renewal, I'd strongly urge you to do the maths and weigh up whether it truly is better to rent than buy."

That shift from renting to buying is set to continue through 2021 as the all-time low prime interest rate of 7% drives tenants to become property owners: "Individuals who currently rent property can, in a large percentage of cases, purchase their first property at a lower monthly cost than their current rental payment," adds Dyer. This shift to buying from renting is evident in the average age of home loan applicants for Q4 of 2020. On average, buyers are one year younger (a drop from 38 to 37), while the age of first-time buyers is down a year from 35 to 34 compared to Q4 2019.

This prolonged buyer's market is the end result of record-low interest rates, more 100% home loan application approvals, and an increase in motivated sellers. It's also worth noting the enabling role played by no transfer duties on properties purchased below R1m.

Statistics from ooba show an on-going trend towards lower or zero-deposit bonds. The demand for 100% bonds among ooba's applicants continued strongly in Q4 2020, with customers requesting 100% bonds constituting 62% of business in February, and ooba achieving in excess of an 80% approval rate for these customer. Says Dyer: "The average deposit as a percentage of the purchase price fell by 16% year-on-year for Q4, indicating more 100% bonds in the market.

ooba anticipates the current low interest rate will remain in place for the majority of 2021. Dyer also feels, "The trend which has removed barriers to many first-time buyers, may have a knock-on socio-economic effect in reducing housing inequality and access to homes in sought-after areas."

Wakefield says less expensive borrowing costs have gone beyond enabling first time buyers to buy, also allowing home buyers to purchase bigger, more expensive properties than they would have been able to previously. "The current home loan rate makes it particularly tempting to buy bigger and better, but as always, it's wise to be cautious and not overcommit." Dyer concurs, "Monthly bond repayments are at an unprecedented low and in saying this, we still urge potential buyers to factor in rising interest rates over the years to make they are covered for every eventuality."