INTEREST RATE HIKES DON’T NECESSARILY SPELL DOOM AND GLOOM FOR PROPERTY OWNERS OR BUYERS! 

As specialists in Conveyancing and property law, we like to keep our clients abreast of news and views within these spheres. One major issue raising concern amongst all role players in the property market, and of course, property owners themselves is that of the current spate of interest rate hikes by the Reserve Bank.

This directly affects bond rates and many property owners are now possibly questioning the wisdom of selling in better times and potential buyers may be questioning the wisdom of buying if the increases are to continue. We need to remember that interest rate hikes are caused by continual inflation and the need to curb spending in inflationary times so they are deemed to be necessary, even if some don’t agree. 

Rather than question whether they are necessary we need to accept the fact that they have taken place and very possibly will continue to rise (although many forecasters predict that they are at their peak) and look to solutions for property owners and offer some advice to potential buyers at this time. 

It seems that many commentators, especially those in the property field (and we tend to agree) believe that interest rate hikes don’t necessarily spell doom and gloom for Property Owners or Buyers! 

Advice for Owners 

• Don’t sell unnecessarily – Remember that these interest rate hikes are just a return to normality after a run of interest rate decreases due to the COVID-19 pandemic. They are still nowhere near as bad as they were near the peak of the 2008 market crash when they hiked to as much as 15.5%! Sell for all the right reasons and don’t run scared of the value of your property either. Buyers are still out there prepared to pay the right prices. 
  
  
• Revise your asking price - Having said that, remember that higher interest rates mean that the pool of buyers will probably get smaller so do ensure that you are not asking an inflated price for your home.  Speak to experienced property agents in the area you are selling to advise you on the correct price of property.  The good news is that the buyers still in the market are more likely to be qualified buyers so just make sure the price is right and the right buyer will emerge.
  
  
• Speak to your bank – Banks don’t want to lose you as a client or face a liquidation scenario. They are more flexible than you think and will most likely give you some leeway regarding payment gaps, extended bond periods etc.
  
  
• Speak to Financial Advisors – In lean times financial advisors can often find solutions (like debt consolidation) that you may not have thought of. They too want to ensure that your wealth creation is not compromised and it’s well worth consulting them.

Advice to Buyers  

• Ensure you are qualified – Due to higher interest rates, if you qualified a while ago for a bond you may not now. Ensure that you are still a qualified buyer and whatever you do allow for future price hikes as many believe that due to load shedding and other inflationary factors like energy costs interest rates may rise again.
   
• Take advantage of more accurate prices – In these times astute sellers will work with their Agents to adjust their prices according to the market. When sellers are under pressure it is a buyer’s market and an excellent time to look for property bargains.
  
  
• Property is still one of the best investments – At a time when many market investments are highly volatile, as we see every day with share prices plummeting in some sectors, property remains a solid investment! Particularly in the Western Cape where property is at a premium with the influx of both local and foreign buyers, very few investments are safer or more lucrative in the long term.

Proceed with caution but not with pessimism and contact us to guide you through the process of selling or buying most probably the biggest asset in your portfolio.  

Groete / Regards

Eberhard, Cheryl-Anne & Andre, Marzanne & Kume