Should Buyers Wait For The Interest Rate To Decrease?
Category RealADVICE
Buyers have been warned to hold-off on purchasing property ever since the interest rate first rose to 11.75% in March 2023, but what many people in the industry have overlooked are that there are some rewards buyers can reap when rates eventually start to decline.
"If you are able to purchase a home in the current property market, then you'll be able to take advantage of lower property prices before they rise again when the cycle turns," says Gerhard Kotzé, CEO of the RealNet property group.
"This means that buyers will be able to enjoy greater profitability when it comes time to sell. And, because many areas in South Africa are still categorised as buyer's markets, they'll have an excellent selection of properties to choose from at more reasonable prices."
"However, it's important not to overspend. The narrative has changed significantly since the beginning of the year, and it looks like we might even see an interest increase instead of a decrease this year. On the other hand, the old saying that says the only bad time to buy real estate is later because it always becomes more expensive also rings true.
"If you have some extra capital and want to make an investment that's protected from inflation, then purchasing a property is never a bad idea, although you can't just choose to purchase any property in the current market and expect to make a profit on its sale. You'll still need to consult with an experienced Property Practitioner and choose a location that's in high demand, or you could risk losing money on your investment," said Kotzé
"Analysts at FNB and Nedbank are more optimistic about rate cuts, despite them noting several risks, as while food inflation is expected to soften, harsh weather conditions could damage crops, which could result in lower yields and added price pressures."
"The ongoing conflicts in the Middle East could also affect fuel prices and logistical costs. This could push the US Federal Reserve's rate cut further back and affect our own interest rate here in South Africa."
"So, while there are some possible benefits buyers can reap when the interest rate eventually decreases, it's important for them to remain cautiously optimistic and not pull the trigger on a property purchase without first doing their homework and consulting a trusted Property Practitioner."
Author: RealNet
