Real Estate Companies Feel Pressure as High Interest Rates Deter Property Buyers
Johannesburg – Real estate companies in South Africa are grappling with the impact of rising interest rates, which has resulted in a decline in property purchases.
The South African Reserve Bank (Sarb) has implemented ten consecutive interest rate hikes since November 2021, pushing the rate up to 8.25%. Alongside a weakened rand, these factors have significantly reduced customer interest in the property market. Homeowners are now facing higher costs for their properties, leading to a decrease in bond registrations for the first quarter of this year, according to property company Re/Max.
Re/Max’s housing report reveals a notable 14% decline in the number of bond registrations this year compared to the same period last year. Additionally, the number of units sold has also dropped by 18% compared to the previous year. The company has experienced a significant decrease of 30% in buyer enquiries, while the number of properties listed for sale has surged by 62%, indicating a growing trend of people opting to sell their properties.
These concerning figures have been attributed to the steep hike in interest rates, putting a strain on the property market and reducing buyer interest in real estate transactions.