The latest rate hike by the South African Reserve Bank created a stir among property experts, and the market is now expected to dampen for the remainder of the year – but there still may be opportunities for some.
This recent hike marks the tenth-rate hike since the current hike cycle started in November 2021, totalling 475 basis points over the period. Rates remain at their highest point in 13 years since the fallout from the global financial crisis weighed on the local currency. “Another 50 basis points is a huge burden for consumers and homebuyers, and the direct effect on homeowners and buyers is that the cost of borrowing has risen drastically over the last two years,” said Seeff.
Given the current economic predicament, she added that a rate hike was inevitable, but 25 basis points would have been far kinder to consumers. “The situation is untenable, and people are going to lose their homes and livelihoods,” she said.Given the current economic pressures, many experts believe the 50 basis points hike will put greater pressure on the property market that’s unlikely to ease for the remainder of the year.
Describing the local property market as one that’s been at an impasse for some time with sellers pricing their properties at between 10% and 20% above the amounts that most buyers are prepared to pay and properties remaining on the market for longer than they should, Pearson said this latest interest rate hike could be the reality check that South Africa’s residential property market needs.
Seeff noted that the rate is still below the average of 15% to 16%. It is also encouraging for the market that we are still seeing the best lending conditions since 2007, with strong support from the banks.
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