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Stable interest rate will not turn house price decline

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While some players in the residential property market have welcomed the Monetary Policy Committee’s decision to leave rates at they are (Prime at 10%), saying it will provide a stimulus to the first-time buyer market, FNB’s John Loos said it will do very little to turn the national house price decline trend.

“The interest rate decision (to leave rates as they were), we believe, will not alter the path of real house price decline in what is currently a very low-growth economy with slow job creation and real household income growth,” said Loos. “Accompanying average price decline is expected to be a further shift away from demand-supply equilibrium, reflected in a likely further increase in the average time of homes of the market from our 16 weeks and 4 days estimated average as per the FNB Estate Agent Survey.”

The first-time buyer market is likely to lead the recovery in demand, with Pam Golding Property group CE, Andrew Golding, stating that this sector of the market is demonstrating increasing appetite and activity, as noted in a recent report by bond originator, ooba which highlights that in August, more than half (51%) of all their mortgages were extended to first-time buyers, transacting at an average price of R953,644 – a figure which is rising steadily. This is compared with a median price of R1,188,492 for all ooba-approved mortgages during the same period.

“Further good news for home buyers is that ooba’s statistics for August reveal that the average deposit required by banks was slightly reduced, at 12.5% of the total purchase price,” said Golding.

His counterpart, Stuart Manning, CEO for the Seeff Property Group, said that buyers who were on the fence about buying should take advantage of the slow growth in property prices.

“The flat interest rate, slow price growth, rise in property stock levels and positive bank lending landscape, makes it an excellent time to buy,” he said, noting that those concerned about expropriation, should take comfort from the important assurances given by President Ramaphosa in Parliament, meetings with the UK and China, and agricultural bodies and stakeholders. “It is important to filter out the noise and misinformation and focus on facts.

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#ExpertsTalk – Clarity on expropriation welcomed

“It is still safe to invest in property. The President has been clear that there will be no wide-scale expropriation or nationalisation, property rights will be protected, and illegal land grabs will not be tolerated.”


David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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