Interest rates rise again

“South Africans are battling rising costs on every front, from food to fuel to home finance,” says David Jacobs, Regional Sales Manager for the Rawson Property Group. “After the last rates hike, we were optimistic that we’d finally seen the peak of the current interest rate cycle.”

For some homeowners, this latest increase could see their monthly bond repayments tip over the edge of affordability.

“Established homeowners who are a fair way into their loan term will hopefully have a little more financial wiggle room, with several years of income growth behind them,” says Jacobs. “More recent buyers, on the other hand – particularly those who purchased at the peak of their affordability during Covid’s record-low interest rates – have not had the benefit of time to grow into their bond repayments.”

As a result, Jacobs says interest rate hikes are hitting these new homeowners the hardest, forcing some to reconsider the viability of their investments.

“Distressed sales are increasing, but it’s important for homeowners to realise that this isn’t their only option,” he says. “Banks are generally very willing to compromise in order to help otherwise-responsible bondholders through periods of heightened financial distress. The first step for anyone struggling with affordability is to approach their lender to discuss options.” There’s also an option to let out the property and move back with family or friends, the steady stream of rental can help with the monthly bond. 

For those who need – or simply want – to sell, however, Jacobs says the market isn’t quite as unfriendly as many make out.

“As long as you price your property accurately and market it well, it’s definitely possible to achieve a favourable sale,” he says. “The key is to read the room and adjust quickly if you miss the mark. Don’t fall into the trap of letting your property stagnate on the market because you’re unwilling to compromise.”

As for buyers, Jacobs says opportunities are abundant, with plenty of well-priced properties on offer. 

“One of the most valuable things today’s buyers have is time,” he says. “Supply greatly exceeds demand, which means there isn’t a lot of competition. You can safely take your time to look around, do your investigations, and find the right spot at the right price without fear of missing out.”

Jacobs does stress the importance of getting prequalified, however, to fully understand your affordability picture within the current economic climate.

“It’s also not a bad time to look at investment properties,” he adds. “The rental market has taken an upturn as buyer affordability has waned, and more people are prioritising financial predictability and lifestyle flexibility over long-term investment potential. That’s not to say rental returns are skyrocketing – tenants are also under significant financial pressure – but demand is high and outlooks are positive for solid growth down the line.”