Tyson Properties CEO, Nick Pearson is just one of many in South Africa who are breathing a sigh of relief following this afternoon’s announcement by the Reserve Bank Monetary Policy Committee that it would pause the ongoing spate of interest rate hikes over the past two years.
Sensitive to the fact that household budgets are getting ever tighter and that the market is more subdued than it was at the beginning of the year, Pearson says it made sense for the Reserve Bank to allow heavily indebted South Africans time to reassess their financial situations going forward.
However, he says that while South African’s can celebrate, they also need to be realistic.
That said, he says this latest interruption in a steady progression of interest rate hikes is just one of many positives that suggest things are beginning to take a turn for the better.
Economic indicators that include dips in the Consumer Price Index (CPI) and Producer Price Index (PPI) and the oil price suggest some degree of normalisation as does a stabilisation of the rand, albeit at a low level. There are also indications that the international economic recession is flattening out even though there is not yet any sign of a peace treaty in the Ukraine.
During the first half of 2023, Pearson says the market has adapted to interest rate hike but has not stalled.
Although the market remains quiet with an increase in distressed sellers and a drop in home loan applications, it now favours buyers and there are still plenty of investors out there looking for a good deal. In fact, in this hugely speculative market, buyers now have more choice and should realise greater value, Pearson says.
He points out that many sectors are recovering – especially the tourism sector with South Africa identified as the best place to visit by readers of the UK’s Telegraph newspaper. An influx of retirees from the UK and Europe who are investing in a better standard of living, more temperate climate and good private healthcare also indicate that investing in property will continue, he adds.
Tyson Properties’ chairman, Chris Tyson, is equally optimistic and realistic, pointing out that the latest BetterBond survey indicates that even though the number of home loan applications may have fallen off as the market waits out the interest rate cycle, property prices have not dropped. Property remains a sound investment, especially for first time buyers who are likely to get more value for their hard earned rands at a time like this.
Tyson acknowledges that those that have been hardest hit by the protracted interest rate hikes are at the lower end of the market. The particularly low interest rates during the Covid pandemic which lured many buyers into the market were unrealistic and he does not envisage interest rates dipping drastically or reaching such low levels again.
In light of this, Tyson advises new buyers to be proactive and work closely with their real estate agents to factor in at least one more interest rate hike and to account for a higher level of interest rates going forward.
He also suggests that property owners who are struggling to meet the repayments on their loans approach their banks to agree to more affordable payment terms rather than find themselves in debt and face the possibility of losing their homes.
“Now, more than ever, those selling properties need to realise that the market is extremely competitive and that they need to ensure that their property is correctly, and realistically, priced. Those most likely to sell their homes and realise the right price are those that are prepared to go that step further and ensure that they are well staged and in a sale ready condition. A desperate and disorganised seller will be the loser,” he says.
Buyers need to make sure they are sale ready as staging could help increase the sale price by up to 20% on average and sell three to 30 times faster. Helpful tips for sellers can be found on: https://www.tysonprop.co.za/news/10-tips-to-make-your-home-sale-ready/