The demand for property is increasing at a higher rate mostly in the low to middle-income market segments. This is driven mainly by affordability and consumers being enticed by the 300 basis points reduction in interest rates this year.
At the same time, house prices are rising at a very slow pace which is below the inflation rate in the last quarter of this year.
Most property sales are taking place in the market below R800 000. And the banks are providing most buyers in this market with 100% home loans.
The demand for property in the higher income market is declining as this market is affected mostly by market and political conditions. And the banks usually require a deposit for those buying more expensive property.
The demand for property has also affected the rental market negatively.
MD of Rode Property Consultants, Erwin Rode explains:
House prices grew by 1.8% during the first 10 months of this year compared to the same period in 2019. And the property market has seen house price growth of about 3% year-on-year which is still below the inflation rate.
Rode has raised concerns about the fact that when the interest rates go up again, many buyers might be forced to sell as they battle to repay their home loans.