While smaller than what the property market had anticipated, the recent interest rate cut has provided an added boost for home buyers. We hope this is the first of more cuts to follow. If inflation continues to decline, and the Rand holds firmly, or strengthens further against the US Dollar, then there is reason to feel optimistic about further rate cuts.
Aside from the interest rate relief, both inflation and the petrol price has come down, providing additional relief for household budgets. At the same time, property prices have remained fairly flat with growth rates rather muted outside of the high-demand Western Cape areas. This is particularly favourable for property buyers who can find good value in the market.
Market analysts believe the market has largely bottomed out, and is now poised to take the next upswing. Although it is difficult to time the market with accuracy, based on previous trends in the market, and given the favourable factors for buyers, we would highly recommend that buyers should take advantage of opportunities in the current market. Those who have bought at the bottom of the market generally benefit from capital growth once the upswing takes effect.
We are already seeing reports that bank applications for home loans have increased, and the urban areas in particular, are reporting an improvement in buyer activity. The warmer months also tend to bring more energy to the market. As the country marks 100-days of the GNU-government, there is a sense of positivity building about the economy and potential impact on the property market.
Despite the anticipated increase in buyer activity, agents continue to caution sellers that it is not yet time to hike their prices. The uptick in buyer demand has not yet translated into the level of competition that the market would need for notable price hikes. Once the market picks up to a notably degree, we are likely to start seeing a rise in prices.
The overall sentiment is that price growth will remain fairly muted until there is a more robust reduction in the interest rate. Seeff would like to see the prime rate return to the pre-pandemic level of around 10% for a more meaningful impact on the property market and on prices.
We continue seeing the market as offering good value, especially in Gauteng and inland areas, and would encourage buyers to take advantage. A notable improvement with more buyer activity and stock levels reducing, will no doubt be more favourable to sellers who would then start looking for higher prices which will mean that buyers will have to pay more. All the more reason to buy now.
Samuel Seeff
Chairman, Seeff Property Group