On the back of the continued sluggish economic growth and creeping inflation, a rate hike towards the third or fourth quarter of the year though is probably unavoidable, but Seeff says that for now at least, this decision is good news. Although a rate hike is unlikely to seriously dent the buoyant buyer activity, largely due to the pent-up demand that has been building over the last few years, it will affect the affordable, sub-R1,5 million sector of the market.
While household debt on the whole has been coming down, a rate hike will most certainly see home loan affordability take a knock as will the ability of consumers to service their monthly debt including their bond repayments, says Seeff. The knock-on effect on the basic cost of living with increases in the prices of especially food and transport will put further pressure on the already burdened household budgets. Consumers should therefore continue to focus on paying off their debts, put off on luxuries and save, save, save, he adds.
Despite the significant challenges, the South African property market continues to show resilience and the ability to bounce back, albeit gradually. Demand has been building for six years and many buyers have decided that now is as good a time as any to buy. Seeff says that for the first time in years, we are also beginning to see a gap between supply and demand develop in many areas including the top end of the market with stock shortages a real challenge.
While foreign buying is up, Seeff says that it is largely South Africans buyers that are driving the demand. The bond approval rates continue to improve and, we have seen more cash buyers, including expats willing to put their money into property. This says a lot about our enduring optimism and confidence in the country and property market.
All things considered, Seeff believes that despite the continued economic uncertainty, this should be a good year for property. News out of the USA, UK and Europe insofar as their economic recovery is concerned, continues to be positive and, with the elections now behind us, it is time to get back to business. On the back of our very successful and credible elections, we should see improved confidence, both from foreign investors and South Africans. What we need now is a positive economic outlook and measures aimed at kick starting our economic growth - it has surely now been long enough, he concludes.
