MEASURE GROWTH IN PROPERTY PRICES TO CONTINUE DESPITE RATE INCREASE
CEO of Jawitz Properties Herschel Jawitz expects property prices to continue their gradual upward trajectory despite the rate increase announced by the Reserve Bank today. The general demand for property, especially in the metro areas, exceeds supply and this is what is driving property prices at the moment. Even with the latest increase in rates, I do not expect demand to fall relative to supply. As it is property price growth has already started to taper off the high levels of 2014.
Jawitz says that the financial impact on bond repayments as a result of the 25 basis point increase is not big. On a million rand bond over 20 years, the monthly repayments will increase by R170 per month and on a R3 million rand bond, by R510 per month. In isolation, these numbers are not big. Buyers that are currently in the market will have certainly factored in the possibility of a rate increase or two and so this increase of 25 basis points should not really push buyers out the market.
Jawitz says that the positive aspect of the rate increase is that the uncertainty around the possibility of the increase is now out the market. Markets and consumers don’t like uncertainty. the possibility of a rate increase has been on the table this year. It has now happened and buyers and homeowners alike must now factor this in to their buying and selling decisions.