Property experts reckon a cut in the interest rate by the Reserve Bank would be a positive move for the South African property market.
However, it is unlikely to change the pedestrian rate at which property prices are increasing, says Herschel Jawitz, chief executive officer of Jawitz Properties.
“It will certainly give consumers more confidence in the economy and ease their financial situations. “There is no doubt that there is a strong relationship between consumer confidence and the demand for property,” says Jawitz.
He says at the moment, buyers are under pressure and are cautious about putting pen to paper when it comes to making offers. As a result, he feels an interest rate cut would add some impetus to the market and at least hold property prices in positive nominal gain territory.
Homeowners still under pressure to keep their homes would welcome a cut in rates and give them a chance to catch up or remain current on their repayments.
The fewer distressed sellers and repossessed homes on the market, the better for property prices, buyers, sellers, estate agents and the banks. Should rates remain the same, the residential market will continue to recover slowly, he says.
“Real price gains are still some way away but prices are increasing and the market is currently offering good value at historically low rates,” says Jawitz.
Meanwhile, Pam Golding Properties (PGP) believes that although the activity levels have increased since the beginning of 2011, the residential property market is still currently experiencing considerable pent-up demand from home buyers.
This, reckons PGP, is largely due to the fact that the ability of buyers to purchase either for cash or with a low deposit is limited.
Dr Andrew Golding, chief executive officer of PGP says there is significant number of would-be buyers who cannot access finance.
“Although interest rates are low currently, the reality is that the market has flattened again and in order to stimulate greater impetus in the primary housing market, a relaxation of the stringent bank lending criteria would be welcome,” says Golding.
He explains that the desire or demand to buy is there, whether it is for the first-time, upgrade, downsize or simply relocate. In the leisure or second home market, there are price reductions and opportunities for buyers taking a longer term view of the market and their investment.
In some instances, he says, sales are being concluded to buyers seeking leisure property and have means to acquire prime coastal investment properties at premium prices without pressure to source rental income from the property when not utilised.
“Despite the fact that the South African housing market remains muted, it continues to demonstrate resilience in the face of global economic concerns,” adds Golding. – Denise Mhlanga
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