The South African Reserve Bank's Monetary Policy Committee decided to keep the repurchase rate at its current level of 8.25% per year, with effect from 22 September 2023.
First-time buyers and those looking to move closer to schools, or who want to semigrate to the Cape areas, are likely to look to secure their property before the new year commences.
The upside for the market is that conditions remain particularly favourable for buyers almost across the board including most areas in the Cape. Although facing a higher interest rate, buyers can generally find a good deal, and if they can afford it at the current interest rate, they will benefit once the rate comes down again.
The downside for sellers though is that they will need to continue pricing according to current market conditions. With fewer buyers and more stock to choose from, buyers are setting the pace of sales. Properties are now taking much longer to sell, and serious sellers still holding out right now, may risk losing out.
- Stable repo rate a boost for home buyers
- Rise in average age of bond applicants
- No rate hike welcomed as stability vital in these uncertain times
- Stability is now vital for the economy
- Resilience in lower price brackets
- To keep interest rates stable is a reassuring outcome
- Property investors should double down on due diligence
Is there light at the end of the tunnel for SA’s property market?The Monetary Policy Committee announcement of zero change to the current interest rate has property owners around the country breathing a collective sigh of relief. General consensus from economists is that this announcement signals the end of the current rates hike cycle, which saw the prime lending rate climb a full 5% (from 7% to 12%) in the space of just two years.
Subdued national house price growthInterest rate stabilisation is good news for national house price growth, which contracted to a mere 1.1% in July (according to FNB’s August Property Barometer report). This, together with slowing demand and affordability-driven downscaling trends, has led to a 3% decline in average bond figures (as estimated by FNB based on deeds data), and a 10.3% drop in transfer duty income compared to last year.
Ongoing buyers’ market conditions
A recent FNB survey supports this view, revealing a 75% increase in the number of sellers having to drop their original asking price to secure a sale. (Actual price reductions have remained stable at around 10% of asking price, on average.)
An eye on the futureBuyer activity has definitely started to increase across all price levels over the last two months where we typically see some fall off in the winter months. Buyers may sense that the next step on rates, even if only well into 2024, is down and now is the time to buy.
Bank lending remains favourable with rate concessions on home loans averaging at half a percent below prime. In most parts of the country it will be a while before sellers start to see any real price growth in the market. In regions like Gauteng, as long as the supply of property exceeds demand at current levels, prices will remain soft. Even with CPI at 4,8%, house price growth is not expected to reach these levels in 2023 meaning that in real terms house prices will likely decline.
Source: https://www.property24.com/articles/repo-rate-remains-unchanged-at-825-a-boost-for-homebuyers/31898