Will the increase in the repo rate dampen the property market?

While the residential property market in South Africa absorbed and adjusted to the January (2014) interest rate hike relatively seamlessly, there were concerns that inflationary pressures and the stance expressed at the previous meeting of the Monetary Police Committee would see the repo rate recommence on an upward cycle – as has transpired, says Dr Andrew Golding, CE of the Pam Golding Property group.

“Although not unexpected, the increase in the repo rate by 25 basis points following last week’s MPC meeting (17 July 2014), is unfortunate news for homeowners, as well as the growing contingent of aspirant, first-time buyers, and will ultimately be most felt by those who are already feeling the pressure of rising utilities costs and erosion in real household disposable income.

“This year the residential property market has performed strongly in all sectors. The Pam Golding Property group  continues to achieve increasing sales volumes (units) in regions and areas around the country, and notes increased consumer and investor confidence across all price bands - including the luxury homes market upwards of R10 million and beyond. The top end of the market has led the way but we have also seen a resurgence of a young generation of purchasers - mainly singles and young couples or families, acquiring their first homes. Encouragingly too there are also signs of significant progress being made in regard to the backlog of distressed sellers which resulted from the recession.

Developments market gains momentum

“In a similar positive vein the market for new residential developments continues to gain traction as developers and home purchasers alike demonstrate a strong appetite for newly built  property, which offers all the benefits of secure and convenient, uncomplicated, lock-up-and-go living in well-positioned, central locations. These and other investor-type products in gated estates afford not only the potential for increasing capital growth and sound rental returns due to strong demand, they offer considerable lifestyle appeal for those who prefer to rent.

Stock shortages increasingly evident

“For the calendar year to date the market has generally been characterised by ongoing positive sentiment, increasing activity levels, brisk sales and a marked shortage of stock in many areas around the country.  During the past quarter these stock shortages have become increasingly prevalent and broad spread around the country, with well-priced homes in popular areas seeing several buyers competing for the same property and selling rapidly. At present activity levels in high demand areas are limited only by access to stock.”

Dr Golding says other factors contributing to the improving residential market outlook include greater affordability, particularly at the lower levels, and marginally easier credit criteria imposed by the mortgage lending banks. “It is hoped that the interest rate remains relatively stable in the months ahead, particularly as the economy requires growth stimulus. However, we are optimistic that the residential property market will enjoy sustained activity levels in the near future,” he adds.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us