The road ahead for South Africas property market

Housing demand still exceeds supply in most parts of South Africa, and this situation is not expected to change for the rest of this year, despite the possibility of a further rate rise.

“July’s 25 percentage point increase, for example, will add only R162 a month to the repayment on a R1 million bond, and with so many buyers being so much better informed and better prepared now than they were a few years ago, they will counter this type of increase simply by buying a slightly less expensive property, or by paying a slightly bigger deposit,” says Gray.

This is according to Richard Gray, CEO ofHarcourts Real Estate, who says the rate of house price growth is expected to moderate from the 8% to 9% achieved last year to around 6% in 2015, thanks to the negative effect that rising interest rates have on affordability.

“Having said that, though, the Reserve Bank has been saying for some time that it planned to start ‘normalising’ interest rates this year, and the anticipated effects have, to some extent, already been discounted by the market,” says Gray.

“July’s 25 percentage point increase, for example, will add only R162 a month to the repayment on a R1 million bond, and with so many buyers being so much better informed and better prepared now than they were a few years ago, they will counter this type of increase simply by buying a slightly less expensive property, or by paying a slightly bigger deposit.”

He says serious sellers, on the other hand, are already showing more understanding of the buyer’s position, and are more willing to negotiate.

In addition, Gray says the banks currently have a strong appetite to lend and to compete for new home loan business.

So the overall picture is one of realistic sellers, consumers who have worked hard to be able to qualify for home loans by saving and reducing their debts, and banks who are keen to lend them money, he says.

“Together with the slowing rate of new housing delivery, this will, we believe, underpin the market for the remainder of this year and well into in 2016, making this an excellent time to sell,” says Gray.

“As it is, our offices around the country are reporting that offers are still coming in quickly on well-priced properties.”