INTEREST RATES - WHEN IS THE BEST TIME TO BUY?
Category Property Ownership
"The time to buy property is now!", says Huizemark C.E.O. Bryan Biehler. This week's announcement by the Monetary Policy Committee that the repo rate would remain unchanged at 8.25% means that the prime rate holds steady at 11.75%.
Many industry leaders feel, however, that keeping the interest rate steady for the 5th consecutive quarter is very disappointing as cutting interest rates would help stimulate the residential property market.
The announcement came as no surprise as the Reserve Bank has indicated in recent weeks that it will only look at implementing a measured rate-cutting cycle once inflation stabilises around 4.5% - the midpoint of its target range of 3 to 6%. Currently, the inflation is at a four-month high and sitting at 5,6% causing many households to re-assess their spending habits. Affordability is closely tied to buying power. When rates are low, buyers can afford more expensive properties because their monthly payments remain reasonable.
The property market operates in cycles. Interest rates and property transactions exhibit a clear correlation. As interest rates rise, there is a downturn in property transactions, and as rates come down, there is an uptick in property sales.
It's a good time to buy property now, while property prices are still low and haven't started increasing yet. Interest rates are 'expected to come down around mid-year' and then property prices will tend to increase.
"Prices are now possibly at the lowest level that we'll see for a long time! Buyers who wait will lose out and end up paying more! Timing is property investing is everything", says Bryan Biehler.
Why wait?
Author: Adrie Barnard
