|
CURRENT SOUTH AFRICAN INTEREST RATES ARE IN THE BOTTOM ONE-THIRD
BRACKET OF THE LAST 21 YEARS
Gideon Hanekom and Nolan Allnutt, the new Anne Porter Knight Frank
agents for Kirstenhof, Tokai and surrounds, have compiled a graph showing
interest rate fluctuations from1986 to the present day - a period of
some 21 years.
“A study of this graph,” said Allnutt recently, “should
boost confidence among the more timid buyers and knock out some of the
wild talk and pessimism that is currently being experienced in the residential
property sector.”
The graph, he said, shows clearly that the current interest rate level
of 14,5% is lower than South Africa has had for 14 of the last 21 years.
But for all except two of those 21 years, sales countrywide had been
satisfactory. It was only in the 1997/1998 period, he said, that sales
actually tapered off markedly.
Throughout the period from 1987 to 1993, added Allnutt, a period which
is often harked back to because throughout that time interest rates
remained very steady, the rates had in fact been some 1,5% higher than
they are now.
“What this graph is telling us,” said Allnutt, “is
that now is a good time to buy because, firstly, the rates are not excessive
and, secondly, after possible further 0,5% or even 1% rises later year
the rates are almost certain to go into a decline, which will be very
beneficial to the housing market. Some economists are predicting as
much as a 2% to 2,5% decline by the middle of 2010.”
“Interest rates go through periods of “natural” cycling
as can be seen on the graph from 1994 to the present, with three clearly
visible cycles. If a straight line is superimposed on these cycles,
it clearly reveals a downward trend in the overall interest rate. This
is something to keep in mind.”
Referring to certain Standard Bank figures, Hanekom said that a 9%
to 11% price growth had been the average in the South African housing
market over the last 30 years and this, he said, is a satisfactory return
“however you measure it”.
In the territories that they serve, said Hanekom, demand and price
increases continue to be above average because land remains in short
supply and so many people see these suburbs as the ideal stepping up
area to take them into the middle and upper middle categories.
|
