Looming rate cut another sign that it’s time to buy property

Nobody rings a bell and announces that the market has hit the bottom and that it is now a good time to buy, but Samuel Seef says the signs are pointing in that direction.

The news that inflation has dipped to 4.6% (from 5.1% in June) to the lowest level since mid-2021 provides ample incentive for rate cuts is a good reason to be positive, he says it goes much deeper than that.

The GNU (Government of National Unity) appears to be heading towards a point where it can really provide what is required and needed to move the economy forward. There is an air of positivity. We see younger cabinet ministers and deputies eager to bring change, and the potential that the country can return to a path of growth.

The lack of loadshedding gives further encouragement that things can be fixed, and that better times are ahead. A stable energy supply will increase GDP growth which is needed to create more jobs and wealth, and boost demand for property.

We are beginning to see this translate into positive sentiment, and Seeff says the property market runs on positive sentiment. People will not invest in property which is a long-term commitment with a pay-back of around twenty years if they do not believe in the future. For the first time in many years, there is a sense that the outlook for the country is brighter.

When you combine that with the outlook of a declining interest rate, it is an added confidence boost to invest in property. He says nobody wants to buy in an environment where the interest rate is on the up because you are not sure where it can land up. However, if you can afford to purchase property at the current rate of 11.75%, and the rate appears to be heading into a downward cycle, then you can buy with confidence.

As a further incentive, most parts of the country have not really seen much capital appreciation for about 5-7 years now, even at the top end of the market. That means that if you are buying now, you are buying more or less at the same price levels as then. At some stage property values will grow again, and you can benefit from the appreciation in value.

Seeff says we have a unique opportunity right now to say that conditions are great for buyers. The banks are still ready to lend. Deposit requirements are still at a decade-long low, and qualifying buyers can still secure a rate concession. Historical data shows that those who bought before a boom cycle have benefited significantly from capital value appreciation, and buyers who hesitate and wait until the market is on the up may end up paying a higher price.

Writer: Gina Meintjes