{"id":18079,"date":"2025-03-19T08:21:35","date_gmt":"2025-03-19T09:21:35","guid":{"rendered":"https:\/\/www.premium-partners.net\/?p=18079"},"modified":"2025-03-23T08:54:30","modified_gmt":"2025-03-23T08:54:30","slug":"lower-interest-rates-boost-real-estate-market","status":"publish","type":"post","link":"https:\/\/www.premium-partners.net\/fr\/builder\/lower-interest-rates-boost-real-estate-market\/","title":{"rendered":"Lower interest rates boost real estate market"},"content":{"rendered":"

This post<\/a> was originally published on this site<\/a><\/p>

<\/p>\n

Although geopolitical events beyond our borders could derail our economy in ways we cannot fathom, there is room to be optimistic about South Africa\u2019s residential property market. <\/span><\/p>\n

The national market has been in the doldrums (there have been regional exceptions, such as the Western Cape) ever since the post-Covid inflation surge forced the SA Reserve Bank to start raising interest rates at the end of 2021. These continued to climb in 2022 and \u201823 until they were the highest they had been since mid-2009.<\/span><\/p>\n

There were other factors, of course: this time last year many South Africans, including me, were very gloomy, having endured many months of unprecedented load-shedding and witnessing the rapid disintegration of our road, rail and harbour infrastructure. There was also the remarkable rise of the MK Party, which eroded the ANC\u2019s support base and which many saw as a threat to economic stability.<\/span><\/p>\n

However, we then had our elections and the formation of the Government of National Unity (GNU), the cessation of load-shedding and a decline in inflation, with the consequent easing of interest rates, and suddenly the future looked brighter.<\/span><\/p>\n

There is always a lag effect on business activity, but by the end of last year the effects of these positive developments were beginning to materialise. With the repo rate dropping a full percentage point, from 8.5% to 7.5% between July 2024 and February this year, and hopes of more rate drops to come, residential property appears to have turned a corner.<\/span><\/p>\n

I spoke earlier this week to a Sandton estate agent, who said 2024 had been the worst year she had ever experienced in the property game, but this year had got off to a good start. She also noted something of a reversal of the \u201csemigration\u201d trend of people moving out of Johannesburg and settling in coastal cities such as Cape Town. <\/span><\/p>\n

John Loos, senior property economist at FNB, writing in his personal capacity for the BizCommunity website in January, said the interest rate cuts \u201ccould be expected to provide a mild boost to the highly credit dependent property market, the residential side of the market arguably being more interest rate sensitive than the commercial property side\u201d.<\/span><\/p>\n

Buyer sentiment<\/b><\/h3>\n

The Absa Homeowner Sentiment Index for the fourth quarter 2024, released in early March, showed that South Africans\u2019 confidence in the future of residential property had climbed to 87% \u2013 the highest level recorded in a decade, with the dominance of first-time buyers an ongoing trend. The survey, which sampled over 1 200 income earners from urban areas, showed growth across all its measurement categories.<\/span><\/p>\n

\u201cThis result bodes well for the outlook of the property market into 2025 and is indicative of the resilience of South African consumers who are optimistic even as they emerge from the burden of a protracted cost-of-living crisis,\u201d said Nondumiso Ncapai, managing executive of Absa Home Loans.<\/span><\/p>\n

Key metrics in the report are as follows:<\/strong><\/p>\n

    \n
  • Sentiment to buy improved to 77% in Q4 2024 from 73% in the previous quarter and has been on an upward trajectory since the second quarter of 2023.<\/span><\/li>\n
  • Selling sentiment grew to 51% from 48% in the third quarter 2024, with some respondents who sold in the last 12 months saying they needed to free up funds.<\/span><\/li>\n
  • Investing sentiment rose 5% to 85% quarter on quarter \u2013 the strongest growth across the survey\u2019s key metrics. Investors feel now is the time to expand their portfolios as the economy is showing signs of recovery.<\/span><\/li>\n
  • 77% of respondents said they were confident to buy rather than rent, up 4% from the previous quarter, driven by the belief that it is more beneficial to own a home than rent one.<\/span><\/li>\n
  • Optimism around renovating property grew 3% from Q3 to 82% in Q4, with some planning to renovate for aesthetic reasons, some for maintenance and to safeguard the future value of their properties.<\/span><\/li>\n<\/ul>\n

    \u201cWhile we continue to monitor key developments in the geopolitical arena as well as within our own country\u2019s Government of National Unity, we remain optimistic about the prospects for South African consumers and businesses in the real estate environment,\u201d Ncapai said.<\/span><\/p>\n

    First-time homeowners<\/b><\/h3>\n

    First-time buyers are expected to remain drivers of market activity, the Absa report found, displaying high levels of positive sentiment. In 2024 they accounted for 53% of property registrations. Ncapai said that the aspiration of home ownership remained strong, and a large base of potential buyers was looking for opportunities to participate in the market.<\/span><\/p>\n

    ooba Home Loans says it recorded a marked increase in the average purchase price paid by first-time buyers in December, followed by a further marginal increase in January, bringing the average to a record high of R1.264 million (up by 5.9% year-on-year). However, it also notes that, compared with a decade ago, the average first-time homebuyer is now older (36 years), with most homebuying activity taking place in the 33-43 age bracket.<\/span><\/p>\n

    National growth figures<\/b><\/h3>\n

    The Lightstone Property Index for January shows that, nationally, house prices rose by 2.2% year-on-year, on average. Growth is below the January year-on-year CPI inflation rate of 3.2%, but closer to real growth than at the beginning of 2024, when the figures were about 1.7% (property growth) and 5.1% (CPI).<\/span><\/p>\n

    \u201cOf the three primary provinces \u2013 Western Cape, Gauteng and KwaZulu-Natal \u2013 Western Cape continues to outperform Gauteng and KZN. However, its trajectory has flattened and marginally decreased, while Gauteng and KZN show continued growth, albeit from lower bases,\u201d the report says.<\/span><\/p>\n

    Looking at property segments, Lightstone reports that growth for high-value properties (R1 million – R2m) rose to 2.3% year-on-year. The low-value (below R0.5m), mid-value (R0.5m – R1m) and luxury segments (above R2m) were 8.7%, 2.1% and 2.2% respectively. <\/span><\/p>\n

    Martin Hesse. <\/figcaption><\/figure>\n

    PERSONAL FINANCE<\/strong><\/p>","protected":false},"excerpt":{"rendered":"

    Although geopolitical events beyond our borders could derail our economy in ways we cannot fathom, there is room to be optimistic about South Africa\u2019s residential property market.\u00a0The national market has been in the doldrums (there have been regional exceptions, such as the Western Cape) ever since the post-Covid inflation surge forced the SA Reserve Bank to start raising interest rates at the end of 2021. These continued to climb in 2022 and \u201823 until they were the highest they had been since mid-2009.There were other factors, of course: this time last year many South Africans, including me, were very gloomy, having endured many months of unprecedented load-shedding and witnessing the rapid disintegration of our road, rail and harbour infrastructure. There was also the remarkable rise of the MK Party, which eroded the ANC\u2019s support base and which many saw as a threat to economic stability.However, we then had our elections and the formation of the Government of National Unity (GNU), the cessation of load-shedding and a decline in inflation, with the consequent easing of interest rates, and suddenly the future looked brighter.There is always a lag effect on business activity, but by the end of last year the effects of these positive developments were beginning to materialise. With the repo rate dropping a full percentage point, from 8.5% to 7.5% between July 2024 and February this year, and hopes of more rate drops to come, residential property appears to have turned a corner.I spoke earlier this week to a Sandton estate agent, who said 2024 had been the worst year she had ever experienced in the property game, but this year had got off to a good start. She also noted something of a reversal of the \u201csemigration\u201d trend of people moving out of Johannesburg and settling in coastal cities such as Cape Town.\u00a0John Loos, senior property economist at FNB, writing in his personal capacity for the BizCommunity website in January, said the interest rate cuts \u201ccould be expected to provide a mild boost to the highly credit dependent property market, the residential side of the market arguably being more interest rate sensitive than the commercial property side\u201d.Buyer sentimentThe Absa Homeowner Sentiment Index for the fourth quarter 2024, released in early March, showed that South Africans\u2019 confidence in the future of residential property had climbed to 87% \u2013 the highest level recorded in a decade, with the dominance of first-time buyers an ongoing trend. The survey, which sampled over 1 200 income earners from urban areas, showed growth across all its measurement categories.\u201cThis result bodes well for the outlook of the property market into 2025 and is indicative of the resilience of South African consumers who are optimistic even as they emerge from the burden of a protracted cost-of-living crisis,\u201d said Nondumiso Ncapai, managing executive of Absa Home Loans.Key metrics in the report are as follows: Sentiment to buy improved to 77% in Q4 2024 from 73% in the previous quarter and has been on an upward trajectory since the second quarter of 2023. Selling sentiment grew to 51% from 48% in the third quarter 2024, with some respondents who sold in the last 12 months saying they needed to free up funds. Investing sentiment rose 5% to 85% quarter on quarter \u2013 the strongest growth across the survey\u2019s key metrics. Investors feel now is the time to expand their portfolios as the economy is showing signs of recovery. 77% of respondents said they were confident to buy rather than rent, up 4% from the previous quarter, driven by the belief that it is more beneficial to own a home than rent one. Optimism around renovating property grew 3% from Q3 to 82% in Q4, with some planning to renovate for aesthetic reasons, some for maintenance and to safeguard the future value of their properties.\u201cWhile we continue to monitor key developments in the geopolitical arena as well as within our own country\u2019s Government of National Unity, we remain optimistic about the prospects for South African consumers and businesses in the real estate environment,\u201d Ncapai said.First-time homeownersFirst-time buyers are expected to remain drivers of market activity, the Absa report found, displaying high levels of positive sentiment. In 2024 they accounted for 53% of property registrations. Ncapai said that the aspiration of home ownership remained strong, and a large base of potential buyers was looking for opportunities to participate in the market.ooba Home Loans says it recorded a marked increase in the average purchase price paid by first-time buyers in December, followed by a further marginal increase in January, bringing the average to a record high of R1.264 million (up by 5.9% year-on-year). However, it also notes that, compared with a decade ago, the average first-time homebuyer is now older (36 years), with most homebuying activity taking place in the 33-43 age bracket.National growth figuresThe Lightstone Property Index for January shows that, nationally, house prices rose by 2.2% year-on-year, on average. Growth is below the January year-on-year CPI inflation rate of 3.2%, but closer to real growth than at the beginning of 2024, when the figures were about 1.7% (property growth) and 5.1% (CPI).\u201cOf the three primary provinces \u2013 Western Cape, Gauteng and KwaZulu-Natal \u2013 Western Cape continues to outperform Gauteng and KZN. However, its trajectory has flattened and marginally decreased, while Gauteng and KZN show continued growth, albeit from lower bases,\u201d the report says.Looking at property segments, Lightstone reports that growth for high-value properties (R1 million – R2m) rose to 2.3% year-on-year. The low-value (below R0.5m), mid-value (R0.5m – R1m) and luxury segments (above R2m) were 8.7%, 2.1% and 2.2% respectively.\u00a0Martin Hesse. PERSONAL FINANCE<\/p>","protected":false},"author":1,"featured_media":18081,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-18079","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-builder"],"_links":{"self":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/18079","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/comments?post=18079"}],"version-history":[{"count":2,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/18079\/revisions"}],"predecessor-version":[{"id":18083,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/18079\/revisions\/18083"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media\/18081"}],"wp:attachment":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media?parent=18079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/categories?post=18079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/tags?post=18079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}