SPRING HERALDS NEW SHOOTS OF GROWTH IN THE PROPERTY MARKET
Category Residential Property News
It's been a long, dry winter in Kwazulu-Natal, but there are definite signs of very welcome green shoots. That goes as much for the interest rate and property landscape, as it does for gardens and farmers.
Myles Wakefield, CEO of Wakefields Real Estate is confident: "Out of all the property indicators, I believe the interest rate has the most bearing on the property market. Why? Essentially, most people borrow money for homes, and the interest rate has a major effect on the amount you can afford. It's a very important indicator. Covid was a very good example - during that very challenging time, interest rates were cut, and we saw how - against all odds - it stimulated the property market."
Every savvy economist is predicting an interest rate decrease on September 19, when the South African Reserve Bank (SARB) meets. This is the day after the US meets to announce their interest rate decision - their rate is very likely to be cut, it's simply a question of By How Much. The US rate always has a global impact, no less so on our South African one. The prediction for the US is ,25 basis points, and ,25 basis points here.
For Wakefield, property professionals foresee that in November - and into next year - rates could potentially come down from ,75 basis points to 1,5 basis points by the second half of next year: "This would spell a very welcome relief for homeowners with home loans."
Wakefield pointed out the good inflation numbers which came out recently: "The Consumer Price Index (CPI) number came down from 5,1 percent to 4,6 percent, and as we know, the governor is looking for 4,5 percent, the midpoint between their benchmark of between three and six percent. This decline in inflation is way ahead of when the SARB believed we, as a country, would reach that figure. It appears it's not a question of if the interest rate will go down, but rather by "how much?"
Kwazulu-Natal is showing little signs of spring, this for a province which has taken severe knocks over the past 48 months. There are tentative fresh shoots in the shape of the GNU, the lowering of inflation which equates to a lowered cost of living, the likely cut of the interest rate, the potential of the two-pot retirement system, and of course, the lack of power outages: "There's a cautious sense of optimism out there, and that translates into a positivity which bodes well for our province. The sign we're looking for in the property market is an increase in volumes - when that happens down the line, we should start to see some price increases. Price always follows volumes.
"At Wakefields, we're quietly optimistic about the start of interest rate cuts, beginning September 19. It'll be a significant green shoot for our all-important KZN property market."
Author: Anne Shauffer
