Favourable loans remain a strong market boost

    Seeff comments on how advantageous bank lending and boosted interest rates create ideal market conditions for buyers.

    The recent price hikes caused significant uncertainty for prospective buyers, who are reconsidering if now remains a good time for property investment; however, according to Seeff, market conditions remain lucrative for buyers and sellers despite these recent hikes. 

    According to economists, the SARB (South Africa Reserve Bank) will grow by an additional 100 BPS (Basis Points) due to a higher CPI (Consumer Price Index). Although the CPI dropped during April, it remains in the upper target range of the SARB; this also caused the rand to drop in value over the last month. 

    Power outages, growing food and petrol prices, pandemic-induced supply restrictions and repercussions of the Russia-Ukraine war continue to hinder the already dismal GDP (Gross Domestic Profit) growth. We expect interest rates to remain below the initial pre-pandemic rate of 2020. The market has adjusted the higher interest rate, so we do not anticipate any significant impact.

    Buyers and homeowners need not make any budgetary adjustments to accommodate these new interest rates, as they will remain a strong forerunner of market demand. Now is an excellent time to purchase property, even for first-time buyers or those looking to upgrade or scale up or down.

    National Credit Act Contributes to Market Favorability 

    The presence of the National Credit Act 2005 significantly increased the favorability of market buying conditions, and continued support from superior mortgage lending also contributed to this. 

    Deposit needs are currently trending at approximately 6-7%, which is uncommon and highly unprecedented in recent years. Although mortgage lending has expanded in the last two years, banks have not extended, resulting in an anticipated continuation of conducive conditions throughout the remainder of this year. 

    The national property price growth sits just under 4% on average, and slow price increases remain a further advantage to beneficial buying conditions. However, there are still exceptions in the high-demand markets and bottom price bands where sellers are seeing increased growth. The primary benefit to this flat price increase is that it boosts the overall market value, particularly at the higher price bands; we encourage buyers and sellers to capitalise on this opportunity.

    Seeff Property Practitioners and Ooba Data Confirm Significant Market Favorability

    Ooba (a popular mortgage originator) reported that 60% of approved home loans today hit over the R1.5 million price range. There has also been an increase in high-value sales above the R20 million price band. 

    Our property practitioners can confirm increased buyer activity between the R3 million to R5 million price band and a resurgence of semigration to coastal and Cape hotspots, such as the Southern Suburbs and Atlantic Seaboard areas. 

    Despite sales volumes normalising after the post-pandemic buyer hype, the market continues to trade at pre-pandemic levels, bolstering positive buyer confidence. The current market remains well-balanced and provides a stable flow of new opportunities to meet high buyer demand. However, this does not work well in favour of sellers, who must constantly align their prices with buyers' needs due to lower price growth.

    buyer signing contract with property practitioner

    With the market boasting such favourable conditions, there is no better time to buy; however, we know this is incredibly daunting for first-time buyers. If you are a first-time buyer, we recommend reading our article on how first-time buyers should keep their offers enticing.

    Author: Seeff Property Group
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