In the ever-evolving landscape of the real estate market, one question has been consistently on the minds of our clients: "What can we expect from the interest rate?" It's a query that holds immense significance for property buyers and sellers, and in this blog post, we aim to shed light on the current interest rate climate and what it means for you.

Interest rate hike:  A 14-year high

Since November 2021, the Reserve Bank has been trying to combat inflation by raising interest rates. These increases have brought interest rates to a 14-year high. Understandably, this has raised concerns among individuals navigating the property market. The interest rate plays a pivotal role in the affordability of homes and the overall financial well-being of households.

Impact on the property market

The effects of these interest rate hikes over the past two years are tangible in the property market. Short-term home prices have been notably influenced, and the data reflects this impact. In the Free State, for instance, the average home price has declined by nearly 4% over the last 12 months. This decline underscores the significance of interest rates in the property market dynamics.

Positive news on inflation

Amidst the concerns surrounding rising interest rates, there is a silver lining. The Consumer Price Index (CPI), a key indicator of consumer inflation, has shown a positive trend. It has now declined to well within the Reserve Bank's target range of 3% to 6%. This is a promising sign as it suggests that there may be no compelling reason for the Reserve Bank to continue raising the repo rate.

Anticipating an interest rate adjustment

In light of these developments, there is growing anticipation that the interest rate may begin to decrease. This news is welcomed by many households, especially those burdened with high debt levels. Moreover, it holds promise for the residential property market, which has seen its fair share of challenges due to the prolonged period of rising interest rates.

However, external factors such as the current war in the Middle East, could change the scenario due to the impact it might have on the oil price, for instance.

In conclusion, the interest rate landscape is critical to monitor for anyone involved in the real estate market. As we observe positive shifts in inflation indicators, there is hope that interest rates may soon begin to decrease. This development could have far-reaching implications, potentially making homeownership more attainable and revitalising the property market.

At Protea Real Estate, we are committed to informing you about such pivotal developments and their impact on your real estate journey. As the interest rate story evolves, we'll provide guidance and insights to ensure you make informed decisions. Stay tuned for further updates, and remember, your real estate aspirations are within reach.