After a year of tightening belts and looking for ways to reduce household expenses, homeowners are likely to be awaiting the January interest rate announcement with bated breath.
Thankfully, another interest rate hike is unlikely to occur at the next announcement, which is set for 25 January 2024.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that an interest rate hike would mean trouble for the property market as a whole.
“Most transactions rely on home finance. When interest rates are as high as they are, fewer and fewer individuals are able to afford the higher debt repayments. We have already noticed this last year, with the industry languishing at a 25-30% drop in sales,” he notes.
On the upside, most economists seem to predict that interest rates will hold steady at the January meeting and might even drop within the first quarter of the year.
“The best thing that could happen for the property market is for interest rates to start coming down again. This will relieve the financial pressure that most homeowners are experiencing and will allow aspiring buyers greater opportunity to afford to purchase property,” says Goslett.
Until such time, Goslett’s advice to homeowners is to try and keep their debt levels as low as possible, especially on the debts with higher interest rates, such as personal loans or car loans.
“Funnel whatever spare cash you have towards paying off those debts first and avoid taking on any new debts if possible,” he advises.
Those who are selling within the current market need to keep in mind that qualified buyers are harder to come by within these economic circumstances.
That being said, Goslett also notes that well-priced home marketed by a good real estate professional should have no problem selling, but buyers will need to trust the advice of their chosen real estate professional if they are to conclude a timeous sale within the current market.
His advice to real estate professionals is to keep on pushing while interest rates remain high.
“Tough market conditions make even tougher real estate agents. If you can survive as a real estate professional and make sales happen in times such as these, then you can rest assured that you have what it takes to make it in this industry,” he notes.
While it is impossible to predict with any certainty what lies ahead, Goslett remains hopeful that interest rates should become more favourable for the real estate market over the course of the year.
“I am hopeful that we will enter into a period of slightly more stability this year and that more opportunities will come about for buyers and sellers alike,” he concludes.