Rates cut calls for a good property strategy
Category News
Chris Tyson, CEO of national real estate agency, Tyson Properties has welcomed today's decision by the South African Reserve Bank (SARB) to cut interest rates by 25 basis points to 8.00%.
He is optimistic that this signals the beginning of a rates cut cycle with another due by year end but encourages property owners to continue to invest wisely going forward.
Together with Bradd Bendall, head of sales at Betterbond, Tyson notes that the SARB's long awaited rate cut does not put a substantial amount back into the pockets of home owners. A property owner with a R1-million bond at 11.75% and with a monthly repayment of R10837, can expect a monthly saving of just R173. One with a R2-million bond at the same rate, will see his monthly repayment of R21 328 drop by R346.
The meaningful change comes if homeowners continue to repay their home loans at the pre-interest rate cut amount against a reduced monthly repayment. The period of the bond will reduce by approximately 2,5 years on a R1 million bond.
Going forward, Tyson expects a few more cuts with rates ultimately coming down by about 2% between now and the end of next year.
"That is what the country needs. All the indicators are there for a good run, property wise, for the next 18 months," he says.
Over the long-term and should the interest rate decline continue, Tyson envisages that the residential property market will move from a buyer's market to a normal market within two years.
He adds that the interest rate drop comes at a very good time - the beginning of spring when the market that is largely dormant during winter naturally reignites. This should boost the 2024 summer selling season.
Author: Tyson Properties
