Home buyers in Cape Town’s Century City are reportedly snapping up homes thanks to low interest rates, according to estate agents.

Brian Usher of Property World says a cut in interest rates has further buoyed the property market with a significant uptick in residential sales enquiries in Century City.

Brian Usher of Property World says a cut in interest rates has further buoyed the property market with a significant uptick in residential sales enquiries.

Usher says the latest drop in interest rates had brought the mortgage rate to the lowest it has been in almost 39 years.

“And, according to Absa, it has made mortgage repayments on home loans about 35.9 percent lower than they were in December 2008 when the mortgage rate was 15.5 percent.”

He says the fact that the lower interest rate was boosting affordability was partly behind the re-emergence of first-time home buyers as well as investors in the property market.

“We have also seen visitor numbers at our show houses increase substantially since the announcement and there has definitely been a strengthening of confidence in the property market.”

Usher says while it was perceived to be unlikely, market commentators had not completely written off the prospect of a further cut in interest rates.

Richard Cardo, who heads up the property mandates at Investec Wealth & Investment, says that going forward it was unlikely that long bond yields, which are already trading below their historical average range, can decline much further and that although South African interest rates are at a historically low level, the forward rate market is pricing in a 40 percent chance of another 50 basis point rate cut this year, he notes.

He says they were optimistic for the year ahead.

Usher explains that the past year, where they notched up 195 residential sales for a total of around R320 million, was the best they'd had in five years and they are forecasting to better these numbers in spite of an expected lower average selling price.

The value of sales in the past year was driven up by the fact they had very high end new developments with average selling prices of around R4 million to R6 million.

He says much of the new stock in the planning stages is more affordable and aimed at young family buyers wanting to relocate to Century City to be near the new Curro school that opens in January 2013.