The Monetary Policy Committee announced yet another disappointing outcome at their latest meeting, with interest rates remaining stable at 8.25% and the prime lending rate at 11.75%.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that this announcement will be a bitter pill to swallow for most South Africans. “Although it has been predicted by many economists that the interest rate cutting cycle will be pushed out to begin sometime in 2025, most consumers undoubtedly would have been hoping for a cut all the same,” he notes.
Looking at how this decision will affect the housing market overall, Goslett notes that while the demand for real estate remains strong, average house price growth continues to be hamstrung by poor economic growth and unfavourable interest rates. “Although each suburb and each province will be affected differently by this, from a national perspective, house prices are unlikely to deliver stronger growth rates until the broader economic conditions become more favourable,” he notes.
Elaborating on this, Goslett explains that given the high interest rates, buyers are unable to qualify for to pay high prices for property. “House price growth is then slowed because sellers have to realign their asking price to what buyers are willing and able to offer within the current market.” Cautioning consumers that it may still be a long while before we see an interest rate cut, Goslett advises consumers to manage their debt levels closely and to reach out for help if they notice that they are in over their heads. “It is easier to recover from a bad financial position the sooner you are able to reach out for help and make a plan through your financial institution,” he recommends.
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