PROPERTY INTELLIGENCE
We all know the remainder of this year will be tough on the pocket for many South Africans , and this means that the property sector could be in for a bumpy ride . In this climate of uncertainty it is important to understand the impact of rising interest rates and energy costs as well as semigration will have on our residential property market in the near term .
TREND 1
Rising interest rates
Although we are going through a faster than normal interest rate escalation cycle , one must remember that we are coming off a very low base that was artificially introduced during the COVID pandemic and lockdown period .
The question of how much of an impact rising interest rates will have on the South African property market depends on how much hiking is left in this cycle . My personal view is that we are likely close to the top of the cycle , and I expect at most another 1.5 basis points increase overall during this hiking cycle .
“ In the absence of major external shock , the residential property market in South Africa should remain relatively stable over the next couple of years in terms of growth and volume of transactions .”
Further hikes will continue to slow down activity from first time buyers ( which we have already seen since the surge of activity we had during 2021 ), and most likely underpin and support the residential rental market .
70 OCT 2022 SA Real Estate Investor Magazine