Comment on interest rate increase: Herschel Jawitz, CEO of Jawitz Properties

Posted On Friday, 28 January 2022 21:13 Published by
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Herschel Jawitz, CEO of Jawitz Properties, says that today’s rate increase will have a marginal effect on the market.

Herschel_Jawitz_CEO

However, the prospect of further rate increases this year will eventually start to impact on demand at the lower levels of the residential market especially first-time buyers. Since rates fell by 30% to 7% in 2020, a significant portion of the activity in the market has been in the first-time buyer category, supported by a positive lending environment and sluggish price growth, which made for the best buying market in at least a decade.

Even with the latest rate increase, rates are still 2,5% below where they were in March 2020 – still a big number. Even if rates go up to 8% by year end, by South African standards they are still low. Our residential market, while still above 2019 levels, hasn’t experienced the same price growth that other markets such as the USA and UK have seen during the COVID pandemic, where they were also driven by low rates and positive bank lending.

South African residential property remains undervalued and still offers excellent value. The middle- and upper-end of the market, which are less rate sensitive and have experienced increased activity in the last year, should continue to remain firm. Jawitz says that the South African Reserve Bank has sent out the right message – one of prudence and consistent policy. If consumers know what to expect, they can plan for it. All markets, including the residential market, don’t like uncertainty.

Last modified on Wednesday, 09 February 2022 21:24

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