Extract from the Mortgage Max 20 May 2021 Newsletter
The property market in South Africa continues to set an optimistic tone even as the pandemic stretches into its second year.
It is rewarding to realize that our industry – the residential market, in particular – has provided significant and sustained ‘life support’ to our country’s economy during a period of being badly afflicted by the Coronavirus.
The good news is that the outlook remains largely positive, after the third interest rate announcement of the year, by the South African Reserve Bank Monetary Policy Committee, which has kept the prime lending rate unchanged at 7%.
Let’s look at some of the practical implications:
- Interest rates remain at historic lows, not seen in more than five decades in our country.
- By the SA Reserve Bank’s own admission it will take years before we see double-digit prime interest rate again, like the 10% we had pre-pandemic.
- Homebuyers have more time to make the most of favourable lending conditions.
- Homeowners have more opportunity to sell and ‘trade up’ to something bigger because they get more for their money.
- Homeowners who want to hang onto what they have can pay off their bonds sooner because low interest rates mean the outstanding balance reduces faster.
- The average time for a property to be on the market has nearly halved – going from 14 weeks to 8 weeks in the past year. This underlines the increased activity in our industry.
- House prices have been rising steadily since late last year. House-price growth is an indicator of property market health.
It is expected that first-time homebuyers, in particular, will continue capitalising. For many months now, large numbers of MortgageMax home loan applications have originated from this segment of the market.
According to Jors Van Niekerk, the CEO of Mortgage Max: “They are buying for different reasons, but included in these numbers, are many people who have been renting for a long time, and the fact that so many are now able to buy, rather than to keep renting, is another positive shift in our current reality,”