Following the first reprieve within the seemingly endless streak of interest rate hikes, many homeowners might be curious to know where the local property market is heading: where will interest rates sit and what will property prices do as inch closer to the end of the year?
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 21 July 2023.
Giving his perspective on the topic, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa thinks that there will be a plateau in interest rates only after September. “I believe that by then, we will (hopefully) be well enough within our inflation targets. I also foresee that interest rates will probably hold steady for a while and that we will probably only start seeing a downward trend later in 2024,” he predicts.
Speaking into what this will mean for the local housing market, Goslett says that high interest rates mean consumer affordability is impacted. “Fewer people who can afford bonds will lead to fewer transactions. If this happens for a sustained period, sellers will need to adjust prices downwards to get their homes sold,” he notes.
This in turn will have an impact on average house price appreciation, which Goslett predicts is bound to stay stagnant for some time. However, he notes that this is area dependent. “Semigration to the Western Cape is a real thing. Despite the fact that RE/MAX SA has more agents operating in Gauteng, for the first time in a very long time, our total YTD Registered Sales Value in the Western Cape has exceeded Gauteng, and this was driven by