South Africa’s property boom won’t be slowing down anytime soon according to Finder.com’s SARB repo rate forecast report.
59% of Finder’s panel believe the boom will sustain itself for at least another year, with 30% saying the trend will continue until late 2022 and 29% suggesting that it will last even longer.
However, just two panellists (7%) think the property market will slow down by November 2021.
Alexander Forbes chief economist, Isaah Mhlanga, believes the boom will last for another year due to the historically low repo rate. “House prices have declined during the pandemic and due to the reduction in interest rates. Monetary policy will start to raise interest rates in 2022 thus increasing the cost of servicing debt and reducing affordability and demand for property,” he said.
While 97% of the panellists expect the repo rate to hold this week, a few panellists (including Standard Bank head of SA macro research, Elna Moolman) say it will rise during 2022.
“We see the inflation outlook as benign enough for the SARB to continue supporting the economic recovery in a prudent manner. In our view, the SARB can and should delay interest rate hikes till 2022.”
Citadel chief economist, Maarten Ackerman, agrees that SARB should hold the repo rate until 2022. Both Moolman and Ackerman say the current rate environment is fuelling the property market.
“We are in a buyers’ market and with current interest rates at all-time lows more consumers can enter the market,” said Ackerman.
Investec chief economist Annabel Bishop thinks the rate will hold this week, but she says any rate increase should not happen until at least 2023.
Bishop is also part of the majority (54%) who say the boom has negatively impacted the rental market.
However, 25% don’t think the boom has negatively impacted the rental market and they do not expect it to. Four Rivers managing director Lebohang Liepollo Pheko says the market will continue to be supported by young adults and students.
“Younger people who are still climbing the property ladder will still rent because they feel uncertain about the future. In addition, unemployment numbers among potential buyers who work in covid vulnerable sectors are also more hesitant to buy,” she said.
Top factors preventing a rate hike cited by panellists include slow recovery of the employment rate (62%), inflation being contained this year (55%) and accommodative US monetary policy (45%).