Any property investor should be looking at the current situation and only seeing opportunity, says Ryan Hunt from HUNT Properties. The three years of increasing interest rates, albeit from a record Covid-induced low base, and the 15-month record high interest rate plateau have caused price stagnation.
"South African residential property as a whole is offering incredible value, and with the aforementioned cost of debt decreasing at a descending rate against a positive economic outlook, buyers can make a confident financial decision. Any prospective Cape Town buyers assuming prices can't increase any further are unfortunately mistaken.
"Although semigration may slow due to better expected governance in other parts of the country, the good news emanating from the Republic is only going to increase the size of both the international market and the South African diaspora returning home, with the Cape Town being the favoured destination," said Hunt.
He said that many South Africans have been basking in the glow of the Rainbow Nation reuniting under the GNU.
"The country seems to have been reset to winter factory settings, with the Bokke playing to packed-out stadiums, KZN basking in sunshine, the Cape donning its raincoat, and Gauteng offering blue skies with a guarantee of frost."
Hunt remarked that South Africans have a reason to feel a bit smug for now, at least until the SARB's latest announcement that interest rates will remain unchanged.
"However, if one can look past the current feeling of angst, you realise that, just like the time of year, we are literally at the top of the curve, and everything is downhill from here. Two of the six SARB committee members voted for the repo rate to be cut by 25 basis points, which is a strong indication that the rate will be coming down."
This opinion is shared by South Africa's retail banks, with the majority predicting a 25 basis point cut in September, to be mirrored in November with another 25 basis point drop.
As the country heads into a South African summer holiday, we can all look forward to a further 50 basis point drop in the first half of 2025, he said.
"The Reserve Bank's prudent monetary policy has successfully reduced headline consumer inflation, which is moving toward SARB's target mid-point of 4.5%. This indicates a slowdown in the price increases of goods and services we consume."
Additionally, in his address at the formal opening of Parliament earlier in July, Cyril Ramaphosa emphasized the government's commitment to curbing the cost of living, especially the cost of petrol, reinforcing the Reserve Bank's efforts.
With consistent electricity supply and a resurgence of international investment, the economic outlook for the next 18 months looks positive. This optimistic scenario is expected to boost demand in the residential property market nationwide, leading to an increase in property prices across the board, said Hunt.
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