Guiding consumers since 2009

Interest rate stability is a boost for housing market

By Staff Writer
Nicolette Dirk, finance writer,
Last week’s announcement by the South African Reserve Bank’s Monetary Policy Committee (MPC) to retain the repo rate at 5,5% is a welcome boost to the housing market.
This is according to Seeff chairman, Samuel Seeff, who said that with the housing market in a much healthier position than what it has been in years, there is every reason to believe that it is poised for a rebound.
Andrew Golding, CEO of the Pam Golding Property, told Fin 24 that the unchanged repo rate is good news for aspirant home buyers and those with existing home loans. 
What should potential buyers expect?
Seeff, however, said there is too much uncertainty around the economy and in particular where interest rates are heading. 
“In the lead up to the MPC meeting, the economists were divided and that is not a good thing. The South African Reserve Bank should do more to instil certainty, vital for both investor confidence and the housing market,” said Seeff.
He added that if interest rates are set to go up in the near term, a more decisive indication in terms of the range and probable time frame is imperative. 
“Households need to be able to plan and given that the interest rate is such a vital driver of demand, real estate needs a sense of the potential impact if the market is to progress meaningfully,” said Seeff.
According to reports, Golding said t consumers continue to be constrained by a variety of cost factors which remain on an upward trajectory, such as fuel and transport, electricity, municipal rates and utilities charges. This is the overall costs associated with owning a home.
Is it still affordable to buy a house?
Seeff said the 50-basis point hike in January has not dissuaded buyers and the market is still very active.
“We anticipate this to continue on the back of the positive news around the interest rate. In the high-demand metro areas demand is beginning to outstrip supply,” said Seeff.
He added that prices are firming and we could start seeing a gradual upward movement over next few months. This gives us every confidence that we are heading towards an upward trajectory but, certainty remains necessary.
“Buyers are talking with their feet, says Seeff. Show house attendance is at almost unprecedented levels and multiple offers are becoming more prevalent. It is a good time to invest in property,” said Seeff.
He added that there has been no significant capital appreciation over the last few years, but if this upward trend persists, time could be running out for those still looking to secure good value. “Buyers that require bonded finance though, would need to allow for interest and cost hikes given the economic and interest rate uncertainty,” said Seeff.
Similarly sellers should note that correctly priced property will sell. There is no shortage of buyers and stock shortages are now a challenge almost across the board in the metros. Seeff said this signalled a good phase for those looking to sell and possibly in turn take advantage of the still favourable buying conditions.
Where is the market headed?
Seeff said that within the South African context, the interest rate, even having regard to moderate hikes, is still relatively low. 
“While any further rate hikes will no doubt impact the affordability of housing and debt servicing costs for bond holders, we are still in a better position than in previous decades,” he said.

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