Is it a good time to buy property in South Africa?

Article summary

• Property remains a safe and reliable investment as pent-up demand is unleashed in the wake of the lockdowns.
• Interest rates are still relatively low despite recent rate hikes, and we’re still in a buyer’s market.
• Healthy competition between banks ensures a high chance of home loan approval.

Property is generally considered a safe and reliable long-term investment, but is there ever a wrong time to buy property? With the economy reeling from recent lockdowns, loadshedding, and inflation; a lot of people may be wondering about the state of the South African property market.

Well, prospective buyers will be pleased to know that the property market has been experiencing record growth over the past two years, as pent-up demand is unleashed in the wake of the lockdowns.

We’re still in a buyer’s market

Lightstone, a data analytics provider on the property market, forecasts a buyer’s market for 2023. House prices are expected to grow at a lower rate than inflation.

Furthermore, the amount of properties available is growing as developers cater to the post-lockdown demand. The increasing availability of properties means sellers have to charge lower prices.

Interest rates are still relatively low

During the COVID period, interest rates were at a record-low, but there have been a series of hikes since then as the South African Reserve Bank seeks to combat inflation.

However, interest rates still remain below the average of 13%-15.5%, and experts predict that the interest rate hikes will come to an end soon.

Healthy competition between banks

Bank approval rates remain high (above 80%).

Banks are responding to the rising demand by competing to offer better deals. Home buyers are more likely to obtain home loans with relatively low-interest rates. They also have a high chance of getting special deals such as the 100% home loan, which removes the need for a deposit (the main obstacle for first-time homebuyers).

Of course, should buyers be required to pay a deposit, they’re likely to get a good deal on that as well, as average deposit requirements are currently below 10%, compared to 18%-23% in 2007/2008.

Rental demand

For property investors looking to buy-to-let, it’s encouraging to know that rentals are increasing in the post-lockdown period.

People are returning to the workplace and thus seeking properties closer to the city centre. Many new developments that are referred to as “COVID babies” have arisen, meaning they were conceived and built during the lockdown period to cater to a work-from-home lifestyle, offering many on-site facilities. These developments are appealing to renters, especially young professionals.

Looking to buy?

If you want to take advantage of the current climate, it helps to know what you can afford. The prequalification process assesses your financial situation and your credit score, providing you with a solid idea of what price range you should be looking at.

This allows you to house hunt with confidence, knowing that your home loan application is likely to be approved in the price range you qualify for.

You can get prequalified by contacting an expert at ooba Home Loans or by using our free, online prequalification tool, the Bond Indicator.