Interest threatens house prices

According to a survey carried out by an online property listing site, rising interest rates and unsustainable price rises are the two biggest threats to the South African property market next year.

Johan Strydom, general manager of, said that three main factors seem to worry consumers when it came to their perceptions of the biggest threat to house prices.

"Our survey showed that 37% of people said that higher interest rates are the major threat to property prices right now, while 23% said unsustainable prices rises posed the biggest threat. The National Credit Act (NCA) was voted the third-largest risk factor with 21% of the votes," he said.

"Interestingly, despite all the headline-grabbing leadership concerns, only 16% of people thought political uncertainty was the biggest risk factor, followed by 2% that ranked the subprime crisis as the biggest problem."

He added that he expected consumer concerns about the NCA to fade as people and banks became more comfortable with its more detailed disclosure requirements.

"Rate hikes are clearly having an impact though," Strydom said. "Fifteen percent of those surveyed said they were cutting back on minor luxuries like eating out and buying magazines, while 16% declared they would cut back on major luxuries like holidays to compensate for the higher costs of servicing home loan debt."

Nearly 17% of respondents said they would be selling their homes, but when asked how they were dealing with the impact of higher bond repayments from interest rate hikes, 41% said that that it had made no impact on them.

Article by: Michael Hamlyn -