The Monetary Policy Committee’s (MPC) latest rate hike (announced on the 28th of May), nudging the repo rate to 7% and the prime lending rate to 10.5%, is the South African Reserve Bank’s way of reminding everyone that inflation is still very much that guest who refuses to leave the party. With geopolitical tensions simmering and commodity prices climbing, SARB is keeping a firm hand on the economic thermostat.
According to Adrian Goslett, while the increase will undoubtedly squeeze household budgets a little tighter (say goodbye to spontaneous online shopping sprees), the property market has weathered many rate cycles before and tends to hold its ground over the long term.
“Higher interest rates will naturally influence buyer affordability and may result in consumers approaching property decisions with even more caution, however, the South African property market remains underpinned by long-term demand as property is viewed as a stable investment,” he explains.
Goslett adds that while higher borrowing costs could see some buyers hitting the pause button or trimming their wish lists from “dream home” to “dream home-ish,” demand for property is expected to remain resilient, even if bond repayments now require a slightly deeper breathing exercise before opening the banking app.
“For consumers, now is the time to review budgets carefully, reduce unnecessary debt, and approach property decisions with the long-term goal in mind. Buyers who plan ahead and remain financially responsible can still find valuable opportunities in the market,” concludes Goslett.