Big jump in bonds for homes priced over R3 million in South Africa
The positive impact of lower interest rates is still being felt, with BetterBond reporting an almost 10% increase in bond applications for the 12-month period ending December 2021, says chief executive officer, Carl Coetzee.
Of these, the bond originator said that 60% of the applications were from first-home buyers making the most of the improved affordability. This percentage remains unchanged from the 12 months ending December 2020.
The percentage of approved applications increased by 12.4% year-on-year for December, and the approval ratio improved by 2.41%, BetterBond said.
The total number of formally granted applications increased by 16.6% over this period, which Coetzee said, compared favourably with the 12.34% increase reported for the 12 months ending in December 2020. The average home purchase price increased by almost 12% in the 12 months ending December 2021, he pointed out.
"The percentage of formal grants increased across all price brackets above R1 million, suggesting that the impact of lower interest rates has had a positive impact throughout the market."
Formal grants for homes of between R500,000 and R1 million still make up the lion's share of BetterBond's applications for the 12 months ending in December last year. However, at 38.8% of the formal grants for this period, it has dropped by 11% since 2020, said Coetzee.
Underlining the renewed buyer activity in all price brackets, the percentage of formal grants for homes of more than R3 million increased significantly from 4.41% at the end of 2020 to 6.45% at the end of 2021.
Grants for homes of R2.5 million to R3 million accounted for 4.3% of all BetterBond's grants, compared with the 3.17% it was in 2020, and homes of between R2 million and R2.5 million accounted for 6.64% of all formal grants, compared with the 5.57% it was at the end of 2020.
"Those buying homes of between R1.5 million to R2 million accounted for 13.45% of all formal grants, compared with the 11.99% reported at the end of 2020. The percentage of formal grants for homes of R1 million to R1.5 million has remained almost constant at around 19.9%," he said.
Article published courtesy of BusinessTECH
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