Welcome to winter in Cape Town. Looking on the brighter side we have passed the shortest day and longest night and are on the way back to sunshine. Ok that was a bit of a stretch but was meant to illustrate that overall, the outlook is positive even though it looks a little damp at the moment.
We thought we would share various current views of the property market by the experts as published by Business Tech.
The recent increase in interest rates by the South African Reserve Bank (SARB) has created concerns among property experts. It is expected that the property market will slow down for the rest of the year, but there may still be opportunities for some.
The SARB decided to raise interest rates by 50 basis points on May 25th, which was mostly in line with market expectations. The decision was made due to high consumer price inflation and a sluggish economy, worsened by power outages.
This rate hike is the tenth increase since November 2021, totalling 475 basis points over the period. Interest rates are now at their highest point in 13 years, influenced by the impact of the global financial crisis on the local currency.
Property experts have expressed concerns that consumers are already facing significant financial pressures, which will make it harder for them to afford home loans. The Chairman of Seeff Property Group, Samuel Seeff, believes that the rate hike is burdensome for consumers and will increase the cost of borrowing.
Given the current economic pressures, many experts predict that the property market will face greater challenges for the rest of the year. Rising borrowing costs have dampened the market, making it harder for first-time homebuyers to afford properties. FNB's property barometer for April 2023 showed a decline in market activity due to high borrowing costs and weakening consumer fundamentals.
However, some experts believe that the rate hike could be a reality check for the residential property market. It may encourage sellers to lower their prices to align with buyers' expectations, leading to increased transactions in the future.
While interest rates are still below the average of previous years, the decline in house price growth is expected to continue due to the weak economy, high unemployment, and increasing interest rates.
Retail visits have partially recovered since the Covid-19 lockdowns but remain below pre-pandemic levels, indicating changes in living and working patterns.
The housing market in South Africa has remained stable, with a consistent demand for housing. Transaction volumes have recovered from the impact of Covid-19 but haven't reached previous levels. Price growth has been affected by the global financial crisis and economic difficulties, with mid-value properties experiencing the most growth.
Commercial, industrial, and retail property prices have generally recovered after Covid-19, except for the office sector, which is undergoing changes and repositioning for other segments such as retail and residential.
The general opinion is that we are near the top of the interest rate cycle and have potential in early 2024 for interest rates to start a downward trend.
Overall, given all of the above, the market generally remains a buyers' market driven mostly by affordability.
As always, as well priced home, will sell quickly and this is something that serious sellers must take into consideration when placing their home on the market. The advice of a real estate agent is critical in pricing to sell in the required time.
As always should you have any questions then please contact us or drop us a message on our Facebook page. Always willing to assist with advice to guide you to obtaining the highest possible price in the shortest possible time.