Good news! Interest rate cut as we kick off 2020 on a more positive note
Category Market Update
The news that the interest rate has been cut by 25 basis points to 9.75% and that the possibility exists of at least one further interest rate cut, is just what the property market needs as we kick off 2020 on a more positive note.
The general expectation is that the economy should start lifting this year. The latest FNB Property Barometer predicts growth of 0.9% for 2020 (up from an estimated 0.3% for 2019). The Seeff Group expects market activity to start lifting this year with more buyers entering the market encouraged by the interest rate drop and favourable bank lending climate.
While buyer activity is expected to improve, sellers will need to remain mindful that stock levels generally remain quite high which means that buyers are still dictating the market pace. Price growth is likely to remain muted and while FNB expects a further mild improvement in the national house price growth to 3.7%, it remains below the estimated inflation rate of 4.3%. That means that asking prices will remain under pressure during the early months of the year, especially at the upper price bands.
Buyers can still find good value in the market. Additionally, those needing mortgage finance will now benefit from a lower interest rate and will find that competition among the banks means that home loan approvals are likely to be faster and on better terms compared to prior years. Qualifying first-time can for example get finance of up to 105% of the property value which includes costs; a significant benefit for the market.
Higher demand will provide a perfect window of opportunity for sellers. If your aim is to also take advantage of the opportunities in the market, then it might be just the right time to sell, but you would need to keep your asking price market related.
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Author: Gina Meintjes
