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Movement lacking in property market

Cape Town - Home buyers need to factor in a possible medium term interest rate rise of up to 3% when they’re house-hunting, said Lew Geffen, chair of Lew Geffen Sotheby’s International Realty.

They should not consider properties that are at the upper limit of what they can currently afford.

Geffen said after the latest announcement of an unchanged 5% repo rate for the seventh Monetary Policy Committee meeting in a row, that the lending rate was unlikely to remain as low next year.

The Reserve Bank’s repo rate is the lowest in 30 years. The decision not to increase the repo rate means the prime lending rate remains unchanged at 8.5%.
 
Geffen said there’s less movement in the real estate market than there should be in the current economic environment.

Sellers are waiting for prices to rise and they’re concerned about finding new homes when there is such as shortage of properties on the market.
 
“From the top to the bottom end of the market there’s an artificial shortage of sale stock," said Geffen.

"It’s a Catch 22, because the longer sellers hold on for more stock to enter the market, the less stock there is to sell."

His advice to sellers – especially those upgrading – is not to postpone.

"We’re likely to see an 8% to 10% per year increase in real estate prices over the next three to five years and we will see the prime lending rate go up,” he said.

"There’s a simple solution for sellers concerned about the stock shortage. Work a six-month occupational rent period into the sales agreement."

That gives sellers enough time to find the new homes they seek and removes the current bottleneck that we’re finding everywhere in SA.”

Currently the national average sale price for properties sold by Lew Geffen Sotheby’s International Realty is R2.1m.

- Fin24


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