Property News You Can Use – presented by Harcourts

The 75 basis point hike announced the past week, after the previous 125 basis points’ rate hikes at prior meetings, makes the most significant impact to date. Added to this, we have to understand the impact on the economy, considering the rising inflation and the fuel price, making it even more significant. The magnitude of interest rate hikes over the past year could likely harm property investor confidence in the near term.

In the 2nd quarter, according to the FNB Property Broker Survey dated April, we had already seen signs of slowing demand and sales activity in the Property market. Therefore, we expect this further interest rate hike to sustain that weakening pressure on the demand for properties.

Having said that, the latest analysis of residential rentals showed strong growth. March had the strongest rental growth performance recorded since the start of the Covid-19 pandemic in March 2020. The quarterly year-on-year rental growth of 1.8% in the first quarter was the highest since the beginning of the pandemic and the first time this number has exceeded 1% since the third quarter of 2020.

The Interest Rate Hike

The 1.8% increase in residential rents
between the first quarter of 2021 and the first quarter of 2022 brought the average national rent to R7 958 in the first quarter of 2022, up from R7 819 in 2021.
In most provinces, the rental arrears situation improved over the last quarter. It is reassuring to see that the percentage of tenants in arrears has recovered nationally. Overall, this quarter’s higher rental growth is reassuring, but agents still need to be vigilant. They must carefully vet tenants and mitigate as much risk as possible as the rental market enters another period of uncertainty. Tenant affordability is an ongoing
issue and a slowdown in the global economy could further impact their finances.

≈ ≈ Marsha