This piece is by Seeff Property Group
March 28 2024
The decision of the MPC of the Reserve Bank to retain the repo rate unchanged at 8.25% (11.75% prime rate) is important for stability as we head towards the elections, said Samuel Seeff, chairman of the Seeff Property Group.
While we always hope for a rate cut, the decision was largely expected in view of the persistent high inflation rate. Inflation increased again in February (to 5.6% from 5.3% in January) which puts it near the upper limit of the Reserve Bank’s target range. The Monetary Policy Committee was therefore unlikely to provide any interest rate relief at this time.
Nonetheless, the market remains upbeat that rate cuts are imminent and should come by mid-year. The economy is in somewhat of an impasse, and needs a boost, and with that the property market too. Seeff said that the higher than necessary interest rate is impacting on the market, both in terms of sales volumes and prices.
There has been a notable decline in sales volumes since the middle of last year and price growth has stalled to just about under 1% which is not a great incentive for sellers. It is still good for buyers though who, despite the higher borrowing costs, can find good deals in the market.
The flat price growth means that property prices in many areas are very similar to what they were two years ago which is quite unheard of and a huge benefit for buyers. At the same time, there are many motivated sellers who are willing to look at serious offers.
Although more people are selling for financial reasons and consumers are under enormous pressure, the banks are still signalling that there has been no notable increase in distress in the market. Seeff said there is unfortunately little room for bargain hunters in the property market. If you are a serious buyer, however, you are likely to find a good price right now, and can benefit once the interest rate comes down.
Bank data further shows that mortgage lending continues to favour the market with stronger approval rates and lower deposit requirements compared to the pre-pandemic period. First-time buyers are also still able to find full 100% bonds, and in some instances with an allowance for costs on top of that.
The upside in the current market is that it is ticking over as buyers look to take advantage of the lower prices. Sellers, however, should be aware that the slowed growth and weaker demand means buyers are looking to negotiate. Realistic pricing is likely to attract buyers while overpricing or testing the market will yield no results. If the price is right and the buyer sees the value, they will pay the price.
247@propertyflash.co.za
