South Africa’s housing market has largely dodged the Covid bullet and emerged as a bright spot in the economy.
But industry players are warning that South Africa’s housing market might cool off, as the Reserve Bank is expected to increase interest rates further over the coming months to tame rising consumer inflation. Rising interest rates will have an impact on the housing market, according to experts. But the degree of that impact and when it will be felt the most is anyone’s guess.
But after adjusting for inflation or in real terms, a worrying house price story emerges. House prices, after accounting for inflation, have fallen by about 2% so far in 2022 owing to the sharp rise in consumer inflation to 5.7%. Rode’s Lamprecht says it is “highly likely” that house prices in real terms will decline in 2022, especially if inflation rises persistently.Industry players argue that home-buying patterns remain strong considering that banks are still prepared to dish out mortgages.