The interest rate cut was too conservative therefore there has not been a notable uptick in the South African property market, according to Samuel Seeff, chairman of the Seeff Property Group.
However, in many urban areas - particularly the low to mid-priced segments - are seeing an increase in buyer activity due to the rate cut. The rise in buyer activity can also be attributed to the warmer months which tends to encourage more buyers.
“Seeff remains of the view that the interest rate is still too high, and the recent rate cut was too small,” Seeff said.
“It should have been at least 50 basis points and we hope to see another cut in November to really make an impact on consumer wallets, the economy and property market.”
Yael Geffen, CEO, Lew Geffen Sotheby’s International Realty said that there is little doubt the rate cut will be a significant shot in the arm for the property market. People have been waiting for this cut either to step onto the property ladder, or to upgrade.
“Everyone was expecting the repo rate to go down in the second half of the year, and buyers have been waiting for it, because it makes a massive difference when you’re servicing a bond,” Geffen said.
“I expect market activity to react almost instantly, and it bodes well for South Africa’s property sector for the remainder of the year, as well as brightening the outlook significantly for 2025.”
Afrian Goslett, Regional Director and CEO, RE/MAX of Southern Africa said that the effect of the interest rate cut is usually felt five to 12 months later.
“The cut will have some bearing on consumer sentiment now, but it is likely to only effect decision making further down the line once the market adjusts to the lower interest rates,” Goslett said.
In terms of homeowners that are looking to sell their properties, Seeff said that sellers need to take note that it is not yet time to hike their prices.
“The uptick in buyer demand is simply not enough to induce the level of competition that the market would need for notable price hikes,” Seeff said.
By raising their price right now, sellers run the risk of having their properties languish on the market, according to Geffen.
Instead of hiking their prices, sellers should continue to price their properties correctly for the market.
Geffen said: “Buyers will compare similar available homes in the area and will opt for one that is more accessibly priced.”
Seeff said that while there might be a small improvement in the price growth outlook, the overall sentiment is that it will be fairly muted until there is a notable reduction in the interest rate.
“We would like to see the rate return to the pre-pandemic level of around 10% prime rate for a more meaningful impact on the property market,” Seeff said.
Goslett said that the September interest rate cut is likely to be the first of an interest rate cutting cycle and hopefully another cut to be announced in November.
According to Seeff, there is an air of expectation that inflation and the petrol price should continue to reduce.
“With the exchange rate remaining under R17.6 to the US dollar, we see an opportunity for the South African Reserve Bank to cut the rate again next month,” Seeff said.
“The economy desperately needs a rate cut, especially as we head into the busy retail season.”
IOL Property