With food, petrol and interest rate hikes already on the horizon due to a weakening currency, the declining rand is also expected to have a knock-on effect on the country’s property market.
The most immediate impact is expected to be as a result of rising interest rates, which will effectively make it less affordable for South African home seekers to buy property. In addition, bond repayments are expected to be on the rise, while less people will be able to qualify for bonds.
“It’s just going to make it a little bit tighter for everybody,” notes Richard Gray, CEO of real estate agency, Harcourts SA.
This in turn will extrapolate the demand for rentals as far less people will be able to afford to buy homes, either outright or via a bond. That could mean a higher financial yield for those renting out property.
There remains a silver lining to the situation however; while property markets have been dominated by sellers due to a shortage of available property and an excess in interested buyers, the hike will result in less buyers, swinging markets towards a position where sellers and buyers are on a more equal footing.
Gray says that should this be the case, sellers will be required to be realistic around their pricing of homes.
“They will have to ensure they market their homes at the correct price. If there are far too many buyers and not enough sellers then you start seeing prices being inflated almost artificially,” he explains.
Another effect is that acquiring property in South African will become even cheaper for international buyers. With Cape Town seen as a prime location for foreign home seekers, this could well boost international interest.
“It does have positive repercussions and can certainly improve the housing market. When one looks at the South African market it is really small, single digits of overseas buyers. The property market isn’t massively influenced by them, but it does provide a nice little boost,” Gray adds. VOC (Mubeen Banderker)