JOHANNESBURG – PROPERTY groups yesterday welcomed the widely expected decision of the South African Reserve Bank to hold the repo rate steady at 3.5 percent, saying it now marked a full year that South Africans have been able to make the most of a historic low lending environment leading to a market significant turnaround.
BetterBond chief executive Carl Coetzee said: “With the prime lending rate currently at 7 percent, the lowest it has been in 55 years, the property market is enjoying an unexpected boom. Notwithstanding the challenges of the pandemic, the knock-on effect of five consecutive repo rate cuts last year has resulted in a significant market turnaround that is showing no sign of slowing down.”
He said many homebuyers have been able to afford up to 30 percent more than they could in January 2020, when the prime lending rate was at 10 percent.
Samuel Seeff, the chairperson of the Seeff Property, said this was great news and underscored the best buyer’s market in decades.
While to date much of the updraft in the property market had been interest-rate induced, driven by first-time buyers, Seeff said overall volumes, which was about 20 000 per month at best, remained well below what it should be for such a low interest rate.
“This is due to a large sector of the market not transacting to any notable degree for some time. This may, however, be about to change,” he said. Seeff said there were early signs that confidence could be returning to the upper-end of the market.
“President Cyril Ramaphosa’s recent actions against corruption both in terms of his Zondo Commission testimony and demonstrable implementation of the ANC’s ’step-aside rule’ has been a confidence boost,“ he said.
Seeff said foreign and second home buyers are also investing again, not just on the Atlantic Seaboard, but in the coastal towns such as Plettenberg Bay as well. South African expats also seemed to be investing in property with the intention of returning to the country.
Dr Andrew Golding, chief executive of the Pam Golding Property group, said the unchanged repo rate had provided stability to the market in respect of aspirant and existing homeowners with mortgages.
Golding said, “Positively, while the impact of the aggressive interest rate cuts last year on the property market are gradually dissipating, the residential property market remains active, with the rate at which banks are lending to new homeowners continuing to improve.”
According to Ooba, the average weighted concession below prime rate eased to -0.12 percent last month, the best rate recorded since August 2020. This compared favourably to a rate of 0.2 percent above prime in May 2020 at the height of the global pandemic.
Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa, said the unchanged repo rate meant that homeowners and first-time buyers continued to find themselves in a favourable position in terms of the interest rate charged on their home loan and the first-time buyers’ market was still incredibly active.
“Owing to this increase in activity, we have already heard reports from some of our offices that there is a lack of stock available in their suburbs. It is possible that we are already beginning to see the swing from a buyer’s into a seller’s market, which means that we may soon start seeing prices begin their upward climb,” said Goslett.