As inflation dips and the prospect of a cut in the interest rate looms, now may be the right time to buy property, says property expert Samuel Seeff.
“Nobody rings a bell and announces that the market has hit the bottom and that it is now a good time to buy, but the signs are pointing in that direction,” the chairperson of the Seeff Group says.
This week, StatsSA has noted that inflation has dipped to 4.6% from 5.1% in June to the lowest level since mid-2021.
Seeff says this dip in inflation provides a huge incentive for rate cuts.
He also has noted that the lack of loadshedding gives further encouragement that things in South Africa can be fixed, and that better times are ahead.
“A stable energy supply will increase GDP growth, which is needed to create more jobs and wealth, and boost demand for property,” Seeff explains.
“We are beginning to see this translate into positive sentiment, and the property market runs on positive sentiment. People will not invest in property, which is a long-term commitment with a pay-back of around twenty years if they do not believe in the future. For the first time in many years, there is a sense that the outlook for the country is brighter.
“When you combine that with the outlook of a declining interest rate, it is an added confidence boost to invest in property,” he says.
Seeff has said that South Africans do not want to buy in an environment where the interest rate is on the up because they are not sure where it can land up.
However, if you can afford to purchase property at the current rate of 11.75%, and the rate appears to be heading into a downward cycle, then you can buy with confidence, he adds.
“As a further incentive, most parts of the country have not really seen much capital appreciation for about 5-7 years now, even at the top end of the market.
“That means that if you are buying now, you are buying more or less at the same price levels as then. At some stage, property values will grow again, and you can benefit from the appreciation in value,” Seeff says.
Banks are ready to lend
Another important factor is that the banks are incentivised to lead.
According to Seeff the banks are still ready to lend and deposit requirements are still at a decade-long low, and qualifying buyers can still secure a rate concession.
“Historical data shows that those who bought before a boom cycle have benefited significantly from capital value appreciation, and buyers who hesitate and wait until the market is on the up may end up paying a higher price,” he says.
Could Johannesburg be the option for you?
The Johannesburg real estate market has seen an influx of major capital since the May elections.
According to Chas Everitt, billions of rands have been flowing into the Johannesburg real estate market since the start of 2024, especially since the formation of the Government of National Unity (GNU) in early June.
Rory O’Hagan, principal of the Chas Everitt Hyde Park and Sandton branch, has recorded more than R800 million worth of home sales in Johannesburg’s northern suburbs just in the the past seven months.
“We have noted increased property demand in our area, and actually right across Gauteng since the beginning of the year,” he adds.
There is a correlation between this data and the latest Absa Homeowner Sentiment Index (HSI).
The index shows that overall confidence in the Gauteng property market has risen from 64% in the second quarter of 2023 to 72% in the same period of this year.
O’Hagan says that it is certainly a buyer's market at the moment in Gauteng with an abundance of “stock”.
He also notes that buyers have the luxury of being able to broker and arrange a price that fits their pocket.
“At the moment it is a buyers’ market, with lots of stock, sellers willing to negotiate and prices at 2018 or 2019 levels, thanks to below-inflation growth for the past five years,” he says.
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