{"id":816645,"date":"2025-03-18T07:00:00","date_gmt":"2025-03-18T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=816645"},"modified":"2025-03-18T07:05:33","modified_gmt":"2025-03-18T05:05:33","slug":"r2570-price-pain-for-south-african-homeowners","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/816645\/r2570-price-pain-for-south-african-homeowners\/","title":{"rendered":"R2,570 price pain for South African homeowners"},"content":{"rendered":"\n

South Africa’s interest rates rose rapidly following several inflationary shocks after the COVID-19 pandemic and have been slow to come down.<\/p>\n\n\n\n

The higher interest rates cost South African homeowners with bonds at least an extra R2,570 per month.<\/p>\n\n\n\n

The chairman of the Seeff Property Group, Samuel Seeff, highlighted the importance and impact of interest rates on homeowners and the property industry in South Africa.<\/p>\n\n\n\n

House price growth, especially outside the Western Cape, has been dismal over the last two years. After growing at rates between 5% and 9% over the 2020-2022 period, it declined to as low as 0.5% by mid-2024.<\/p>\n\n\n\n

Seeff noted that interest rates also impact people’s ability to afford their own homes and are an important measure of the health of the housing market and the economy.<\/p>\n\n\n\n

Seeff explained that if the interest rate is high and incomes are not growing, it becomes more difficult to afford property, and demand lowers. <\/p>\n\n\n\n

He added that this creates a situation where there is reduced competition for properties on the market, which keeps prices lower.<\/p>\n\n\n\n

Conversely, Seeff said that if the interest rate comes down and incomes grow, property becomes more affordable, it becomes easier to obtain home loans, and more people can buy property.<\/p>\n\n\n\n

Lower interest rates also mean increased competition for properties on the market, and buyers are inclined to offer higher prices, resulting in higher price growth.<\/p>\n\n\n\n

Seeff demonstrated this by looking at house price trends since March 2020 with the onset of the Covid-19 pandemic. <\/p>\n\n\n\n

In March 2020, the interest rate was at 9.75%. The Reserve Bank then introduced a series of rate cuts between March and July, bringing the prime rate down to 7%.<\/p>\n\n\n\n

This immediately made properties more affordable, bringing down the monthly repayment on an R1 million home loan over 20 years to R7,753 per month. <\/strong><\/p>\n\n\n\n

Seeff highlighted that this spurred demand for homes, and an increase in demand resulted in a national house price growth of 4.10% for 2020.<\/p>\n\n\n

\n
\"\"<\/a>
Chairman of the Seeff Property Group, Samuel Seeff<\/em>.<\/figcaption><\/figure><\/div>\n\n\n

However, several inflationary shocks forced the South African Reserve Bank (SARB) to quickly hike rates to stem inflation.<\/p>\n\n\n\n

These shocks included adverse weather that affected food supplies, geopolitical tensions that hit fuel prices, and supply chain disruptions that impacted several sectors.<\/p>\n\n\n\n

The subsequent incremental increases in the interest rate from late 2021 brought the prime rate to 11.25% by May 2023.<\/p>\n\n\n\n

This resulted in the monthly repayment on this R1 million home loan increasing to R10,493 per month, thus an additional R2,740 per month.<\/p>\n\n\n\n

Property affordability declined, and with that, the demand for property in the market. National house price growth consequently declined to just 0.7% for the 2023 period, according to the StatsSA House Price Index.<\/p>\n\n\n\n

While further interest rate cuts since late last year have brought the prime rate down to 11%, the R1 million home loan repayment has only come down to R10,322<\/strong>\u2014a meagre saving of R171 per month.<\/p>\n\n\n\n

Comparing the current interest levels to those seen in 2020 reveals that homeowners are paying R2,569 more than they were five years ago. <\/strong><\/p>\n\n\n\n

Additionally, due to the hikes, Seeff noted that national house price growth remained flat at about 0.8 for 2024, according to FNB data.<\/p>\n\n\n\n

While property market activity has increased, and confidence in the market has soared to the highest levels in a decade, according to an ABSA survey, data from FNB shows that house prices only increased by 1.1% in January. <\/p>\n\n\n\n

Seeff said this is a clear sign that more interest rate cuts are needed. He added that the interest rate is still well above what it was in early 2020. <\/p>\n\n\n\n

He argues that this is despite the fact that inflation is at around 3.2%, near the bottom of the Reserve Bank\u2019s target range of 3% to 6%.<\/p>\n\n\n\n

“A lower interest rate will provide a vital boost to the economy and housing affordability, drive higher demand, and consequently boost house price growth.” <\/p>\n\n\n\n

Seeff stressed that strong house price growth is vital to encouraging further investment and development growth. <\/p>\n\n\n\n

“A healthy housing market with strong growth delivers multiple economic benefits, including boosting economic and job growth and government revenue in the form of taxes,” he said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Post-Covid-19, South Africa’s interest rates rose quickly but have not been as eager to come down, costing homeowners with bonds an extra R2,570 per month.<\/p>\n","protected":false},"author":92,"featured_media":767689,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12755],"tags":[2922,11693,853,20457],"class_list":["post-816645","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property","tag-interest-rates","tag-seeff-property-group","tag-south-africa","tag-south-african-reserve-bank-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/816645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=816645"}],"version-history":[{"count":7,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/816645\/revisions"}],"predecessor-version":[{"id":816740,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/816645\/revisions\/816740"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/767689"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=816645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=816645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=816645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}