Where to with interest rates?
Property experts have not been anticipating any further interest rate hikes for 2007 after a drop in the inflation rate. However, things could change soon as petrol and food price increases threaten... This is turn would mean repercussions in the form of possible adjustments to the prime lending rate.

Don’t overextend yourself

So how can you as a property buyer protect yourself in this volatile environment?

The answer is — don’t overextend yourself when you make a property purchase.

"It is vital that you sit down with your advisor who can work out your monthly repayments in different interest rate scenarios. If you feel comfortable with the higher repayments then you can go ahead and make the purchase," says Tony Clarke, managing director of Rawson Properties.

Tightening controls

The government is also reining in buyers and spenders with the new credit act effective from the middle of the year.

Consequently, banks are following swiftly — already tightening conditions under which they will give bonds, and says Clarke — “they are being more selective in their choice of bond recipients”.

There has, however, also been a move to get existing bondholders with a good payback record to extend their bonds for additional properties or extensions to existing homes.

Property outlook 'remains good’

Despite the volatility in interest rates, property experts are still optimistic about the future of residential property in South Africa.

"The outlook for residential property in South Africa remains good", said Clarke, predicting value rises of up to 18 percent in the cheaper brackets by June 2008.

“With some half a million new jobs being created each year and the GDP growth rate at close on five percent, residential property will be much in demand for the foreseeable future," concludes Clarke.

As long as you as a buyer and or property owner take into account how future interest rates could affect you and plan accordingly, there should be no reason to panic.

Article from: www.iafrica.com