Property market resilient despite recent interest rate hike
While the rate cutting cycle has now stalled, and the market must contend with the recent 25 basis point rate hike taking the prime lending rate to 10.50%, it is important to bear in mind that it is still at the lowest level in over three years.
These ups and downs are part of the property market as it tracks economic fluctuations and moves through cycles. Although these interest rate fluctuations tend to influence activity, the upside is that market conditions remain favourable for both buyers and sellers.
Despite buyers having to adjust their budgets to accommodate the higher rate, either having to pay a bit more for a home loan or buying for slightly less, bank lending conditions remain favourable. There is also still plenty of good stock to choose from, especially in upcountry areas.
The implications for sellers are that despite tighter stock levels in many areas, the focus will remain on accurate pricing to secure a successful sale given that the interest rate usually result in fewer buyers in the market.
From a selling perspective, it is also encouraging to note the steady recovery in the average national house price from the low growth levels of 1.2% in 2024 to 5.4% in April (based on FNB data). This is slightly ahead of inflation.
The rental market remains robust, and will likely see a further boost from the rate hike on top the continued semigration and influx to commercial hubs. This is good news for investment opportunities, especially in areas experiencing stock shortages.
While the first-quarter GDP growth was slightly ahead of expectation, the impact of the continued Middle Eastern War will continue to weigh on the economy and keep pressure on the interest rates, and buyers and sellers should adjust their outlook accordingly.
Samuel Seeff
Chairman of the Seeff Property Group
