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Pillars of Justice

Property Market in South Africa Shows Signs of Turning Around

At Gerhard Barnard Inc Attorneys & Conveyancers, we closely monitor the trends in the property market to provide our clients with the most up-to-date information. Recent data suggests that the South African property market may be on the verge of a positive shift.

According to BetterBond’s latest Property Brief, there are reasons for cautious optimism. The data indicates that both home loan values and volumes have improved, hinting that the property market slowdown over the past two years may have reached its lowest point.

Nationally, home loan values have increased by 1.2% year-over-year as of April 2023. More notably, the volume of home loans has surged by 20% this year. However, it's important to note that the number of new applications for the 12 months leading up to April 2024 is still 15% lower compared to the previous 12-month period. Despite this, the April index for new home loan applications was 2.3% higher than the first quarter of 2024, showing some positive momentum.

Bradd Bendall, interim CEO of BetterBond, highlighted that a decrease in consumer price inflation (CPI), which dropped from 5.3% in March to 5.2% in April, could potentially lead to lower interest rates. This would provide much-needed relief to debt-burdened households and stimulate more home loan activity.

“At a time of great uncertainty, as South Africans prepare to head to the polls, there is some comfort in evidence of the property market’s resilience, as house prices continue to strengthen, albeit modestly,” said Bendall. He added that the consistent performance of the rand against other currencies and the downward trend in CPI might encourage the Monetary Policy Committee (MPC) to consider lowering interest rates in their meeting on May 30, right after the elections.

A Note of Caution

Despite Bendall’s optimism, it is unlikely that the MPC will cut interest rates in the immediate future. Although inflation has decreased, it still remains above the midpoint of the 3% to 6% target range. Consequently, a reduction in the repo rate from its 15-year high of 8.25% is improbable in the upcoming meeting.

Razia Khan, chief economist for Standard Chartered Bank, noted, “Despite this better-than-expected outcome, with the South African Reserve Bank increasingly signaling its preference for a 3% point inflation target, we expect no policy rate easing until November.”

At Gerhard Barnard Inc Attorneys & Conveyancers, we remain committed to helping our clients navigate these changes in the property market. Our experienced team is here to provide expert advice and support for all your conveyancing needs.

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