Stable interest rate welcomed as property market gains momentum
Tuesday, 23 July 2013, 11:00
Seeff Chairman, Samuel Seeff
PROPERTY NEWS - The decision by the Reserve Bank’s Monetary Policy Committee to retain the repo rate at 5%, is welcome news for the stability of the property market, says Seeff Chairman, Samuel Seeff. Despite the renewed economic uncertainty and downward economic growth adjustment since the second half of last year, we continue to see stable trade with about 18,000 to 20,000 monthly deeds office transactions.
There is an overall positive mood within the market and, especially during the first half of this year our branches have reported increased buyer sentiment and activity.
While the wider macro-economic landscape is still not conducive to a real recovery, the market has settled into a new normal. Overall consumer indebtedness has reduced since 2007/8 and the banks are more willing to grant loans, although the high levels of consumer debt still constrains overall sales volumes. This notwithstanding, there is life in the market and well-priced properties are selling, with stock shortages becoming a reality in most of the major metropolitan areas, he says.
Buyers should not sit on the side-lines for too much longer; for those who can, now is the time to buy. While a rate hike towards the latter part of the year is probably inevitable, Seeff says, that even at a 1% increase, mortgage finance is the cheapest in more than 30 years. For ordinary home buyers, this means that there are significant savings to be had right now. According to FNB’s most recent house price index, average prices are on the whole down by about 20% since 2007/8 and this, combined with the low interest rate, makes it an ideal time to buy.
Even in the primary residential sector, conditions continue to favour buyers and there are good deals to be had. Those looking to acquire a second holiday or investment home will find unmatched value in the secondary coastal markets on the South and West Coast and on the Garden Route. If you are in the market for a country-side getaway, you may find even better value in some of the most beautiful towns and villages scattered across the country.
While we would need to wait for overall economic sentiment and macro-economic fundamentals to improve the market seems to be gaining momentum and for now, it remains business as usual with sellers and buyers doing good business on a daily basis.
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