The decision by the SARB to increase the repo rate by 25 basis points to 4% (prime lending rate now at 7.5%) was entirely expected and is unlikely to affect the momentum in the property market, says Samuel Seeff, chairman of the Seeff Property Group.
Against the backdrop of rising inflation and a higher oil price, Seeff says, while unfair, it is inevitable that the consumer will unfortunately have to absorb the higher costs even though the rising inflation is not as a result of higher consumption.
Nonetheless, he adds that even with the hikes, the rate remains at the lowest levels in decades and will continue serving as an inducement to buyers. We expect the market to absorb the hike comfortably and for the momentum to continue.
Looking back over the last year, the market has again defied expectation and ended with some of the highest sales in over three years. From a Seeff perspective, we achieved a respectable R1.5 billion in gross sales on average per month, the highest in over 57-years, 33.3% up on 2020 and 18% higher than our previous record year.
Seeff expects another good year for the property market and says it remains particularly favourable for buyers. The momentum will continue creating opportunities for sellers, and aside from continued trade in the sub-R1.5 million price band, we anticipate strong activity in the R3 million to R8 million range.
2021 was also an excellent year for the super luxury sector, and in particular for trophy home sales, especially in the Cape. Seeff alone concluded twelve sales above R20 million over the last year, some at record prices.
It has been a booming summer for the coastal areas such as the Atlantic Seaboard, Hout Bay, Southern Suburbs, Strand, Hermanus, Southern Cape and Garden Route, but also for some inland areas such as Ekurhuleni, Centurion, Hartbeespoort, Polokwane and Secunda.
Despite the rate hiking cycle now in effect, it is still the best buyer’s market in decades, supported by bank lending which remains the best in over a decade with higher loan-to-value bonds available and first-time buyers still able to secure 100% bonds, often with a cost allowance on top of that.
Seeff says further that despite the momentum in the market, there has been a steady flow of new stock and while there are stock shortages in some areas and price bands, the market remains well-balanced. Price growth has been kept flat, largely inflation-linked due to slow economic growth and rising inflation. Buyers can therefore still benefit from well-priced stock in the market.
Seeff says there has simply not been a better time to get into your own home in over ten years. It makes absolute financial sense if you have the means and commitment required to be a homeowner.
That said, the rate hiking-cycle signals some caution for buyers and homeowners to be mindful that we are likely to see further hikes this year and they must build that into their home ownership plans.