New reality for homebuyers and sellers in South Africa

 ·12 Nov 2023

Property experts say that homebuyers and sellers need to start getting to grips with the reality that higher interest rates are likely to stick around for longer. This means that each side of a sale will need to make adjustments.

Current expectations from economists and analysts point to the South African Reserve Bank (SARB) holding the repo rate at 8.25% again in November – with some leaning towards another rate hike.

In either case, the wider narrative is that interest rates will stick to restrictive levels for now, with rate cuts only projected for the middle of 2024.

Given this reality, Seeff Property Group said home sellers may now need to relook their asking price to bring it more in line with the longer term outlook.

Homebuyers, meanwhile, will need to either adjust to higher repayments or buy for slightly less to ensure they have a financial buffer.

“The good news is that the banks are still lending, and qualifying buyers can still find favourable terms,” said Samuel Seeff, chairman of the Seeff Property Group.

Managing tough times

For households that are struggling with high interest rates in general, Seeff said that making adjustments to monthly budgets can go a long way to watering the storm.

“Start by reviewing your budget and making adjustments. Look at where you can cut by cancelling unnecessary subscriptions and shopping around for cheaper insurance premiums.”

The property expert said that households should also focus on reducing debts.

“Financial planners suggest paying a little extra every month on your debts, or focus on reducing high-interest debts such as credit and store cards first. This will free up cash to further reduce your debt. Do not make further debt, rather cut back on your living costs,” he said.

“You could also look at accessing surplus funds in your mortgage loan. If you have an access bond, you could access any surplus funds that you have accumulated to pay off some debts.”

Mortgage originator, ooba, suggested refinancing home loans. This will require a new bond to be registered, which will be based on the latest value of a property.

“If you are struggling to pay or are falling behind, you should look to arrange new payment plans. Debt counsellors suggest that you do not wait because it will just get worse. Rather contact the lender or retail store to make new arrangements. You should aim to avoid bad debts and a negative impact on your credit score,” Seeff said.

The property group said that a home is vital, and owners should avoid financial distress on home loans by immediately contacting the mortgage bank if they are battling to keep up with the repayments so that alternative arrangements can be made.

“If you are selling for urgent financial reasons, you should be upfront with the agent so they can assist you in the best way possible.

“You could also consider downgrading your property. There are many options. You may be at a life stage where you could downgrade your home and benefit from an easier lifestyle and added cash by going smaller,” the group said.

Read: South Africans can’t afford their homes

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