23 March 2021, Johannesburg - The last two quarters of the 2021 financial year had everyone in the property industry astonished at what an interest rate cut of 3.5% could achieve.
The notion of pent-up demand has long been thrown out the window with everyone now asking how long this trend will continue.Shaun Rademeyer, CEO of MultiNET Home Loans, believes that we will continue to see this property boom in the residential space throughout the 2022 financial year - we have already noted 1.5% increase in the amount of first-time home buyers, as well as an increase in average approved loans to property value.
“March is the start of the new financial year for SA as a whole, and we can already see that the home loan submissions have almost doubled compared to the same time last year. Yes, the last week of March last year was the start of our lockdown and the increase is taking this into account, however we are already 27% above the previous year’s average.
The middle market continues to be the driver of the price increase, even though we have seen a slight slowdown from 2020. The average price submitted has increased by 5% versus the previous year’s 10% growth. But we must remember that the consumer market is still under pressure and the increase we seeing is the percentage of property moving in the higher price bracket of R1.2 million to R1.5 million, this market has gained the most since the reduction in interest rates.
Buyers do have an advantage though in that we have seen the Prime Plus Interest Rate decrease from 1.62% to 0.49% which should ease the repayment burden somewhat on home buyers.As we move through the property cycle in the later part of this year, we will find that supply will start surpassing demand and property prices could come under pressure again. The banks’ payment holidays are coming to an end and many developments that stood still during lockdown will be launching in the market.
“It’s unfortunate that our economy will not be growing fast enough to sustain the demand and eventually we will see the market slow down” says Rademeyer, “however we will still look forward to good year and expect to assist many as they purchase the first, second or even fourth homes.