Your search results


Posted by Heiberg Estates on May 31, 2022

 Dear Property Partners

It is indeed a rather wintery economic landscape all around us, especially since the latest announcement by the SA Reserve Bank (SARB) of a .5 repo rate increase, bringing the repo rate to 4.75% and the prime lending rate to 8.25%. This will for example increase a monthly R2m loan bond repayment by a substantial R600! The latest and several interest rates increases so far this year, are being factored into prospective buyers’ budgets who mostly do not necessarily shy away in buying property but downscaling into cheaper categories due to a more cautious and conservative approach, especially since more interest rate increases are expected over the course of this year. Our Agents at Heiberg Estates observe it in our Buyer’s response where around 65% of prospective buyers are now focusing between the R3,2m to R4.5m price ranges – these middle-range buyers used to be focusing in up to R5.8m price ranges but as mentioned, there is a much more conservative approach now.

The announcement didn’t come as a surprise and was widely expected due to our rapidly escalating inflation. The 0.5 basic point repo rate increase is the first time since 2016 that an increase is higher than 0.25 basic points. Furthermore, the soon-to-be-announced further radical fuel price increases (which over just the past year already increased by around 30%), together with ever-increasing food-, electricity, and other basic day-to-day living costs, will decrease people’s cash flow and affordability to buy properties. The banks are also visibly tightening their lending criteria. Due to all the economic uncertainties and also further predicted 3 x repo rate increases during the rest of the year, we are as mentioned picking up a trend in the property market that people are downscaling their initial property price expectations and lowering their buying budgets in lieu of all the latest price shocks and more to come. It is especially in the lower price ranges that people are again toiling with the idea rather to rent than to buy in order to ride out the economic storms and uncertainties.

The SARB is closely following international central bank rate increases in order to protect our fragile rand. The US Bank recently hiked its interest rate recently also by 50 basis points, the biggest increase in 22 years with many other international banks expected to follow suit due to higher-than-expected inflation rate increases. This course of events not only putting our real estate markets under continued pressure but further also the SARB, which will announce further repo rate increases this year in order to curb the flow of capital flowing out of our country and to protect our fragile rand exchange rate.

Our inflation rate has been 5.7% in January and February, whilst 5.9% was recorded in December and March – very close to the SARB upper band of 6%.  We are now in our twelve months where inflation is higher than 4.5%, the midpoint of the SARB band in trying to keep inflation between 3% and 6 %. Unfortunately, leading economists are predicting an inflation rate of far more than 6% soon, whilst the last time it was higher than 6% was in March 2017, recorded at 6.1%. Inflation above 6% has already been recorded in 6 of our 9 provinces looking at the latest statistics.

On the global stage, some countries are recording the highest inflation in 40 years. In comparison to us, Russia recorded an inflation rate of 17.8% (the highest since January 2002), Brazil at 12.1% (the highest since October 2003) USA at 8.5% (the highest since December 1981), and the EU averaged 7.4% (the highest ever). The Ukraine war, geopolitical tensions, and worldwide war-induced fuel- and food price spikes, playing an inevitable role in this sad and unexpected 2022 course of events. Furthermore all of these factors leading to worldwide increases in basic living costs that will inevitably also further have a ripple effect on our economy in specific referral to food/fuel prices and day-to-day living costs and have a dampening effect on affordability to buy properties.

On the Commercial front and due to a general national shortage of low-cost housing, we are observing that increasingly property funds continue to offload their empty standing office blocks which are being bought up by developers and converted into small, sectional title residential units. Especially with the Government supporting this type of housing and giving incentives, whilst in addition also entering into Public-Private Partnerships with solid service level agreements in place. This assisting that the financial risk factor for such developments are hugely addressed and minimized.  A given fact is that it is substantially cheaper to revamp existing office blocks into residential units, than building from scratch. Utilities infrastructure is already in place and local authorities partner with developers to leverage inner-city residential projects to address the growing social housing backlog. We are expecting that this trend is here to stay and that it will pick up momentum for many years to come.

Some of the latest interesting facts and statistics are as follows:

  • Some positive news is that despite all the drawbacks and present challenges, our SA Property Market in general remains to be resilient in comparison to 2008 when inflation was 11.5% and the property bubble burst with house prices that decreased substantially. And despite the latest interest rate increase, we are still below the pre-COVID 10% prime interest rate.
  • However, looking at Commercial properties and with more interest rate increases expected, there is a general belief that there will be a renewed slowdown in sale activities across the board for the remainder of this year and vacancy rates can once again take a knock, lowering ROI’s. Price increases are expected to be very moderate and in the low single digits.
  • Buyer’s activity inevitably is also lessening during the winter months, but there will always be a good demand for properties that are well located, offers good value for money and are market-related priced as people especially now, shop-by-comparison! Heiberg Estates has recorded excellent sales over the past few months for which we are entirely grateful, but we are still almost out of stock – please contact us!
  • Fortunately, we are still far away regarding the interest rate recorded at 15,5% during the 2008 property slump when prices across the board, decreased substantially. On an R2m bond and with the latest 0.5% interest rate increase, homeowners’ monthly bond repayments are still R10 000 less than 14 years ago – so there is always a silver lining if one looks hard enough!
  • A recent FNB Residential Property Barometer report points out that the national loan-to-price ratio (the proportion of the purchase price that lenders fund from private funding as deposits), has increased to 94.9% recorded during the first quarter of 2022 – meaning that buyers are putting down the smallest deposit amounts taken over the past fourteen years. A clear example of how cash flow is being heavily impeded by our present under pressure economic state of affairs throughout all sectors of our property market.
  • Also, according to this report house price increases have stabilized in the last few months where property price growth declined in April, averaging 3.9% year-on-year in comparison to the 4.1% recorded in March.
  • Semigration is still pretty much a factor that has been enhanced with Covid and remote/hybrid work arrangements and does have an impact on higher than the norm property price increases for properties located along our coastline – the so far yearly property price increase difference between inland versus coastline asking prices, are being calculated at around 2%.
  • Lightstone recently reported house price increases in e.g., Nelson Mandela Bay of 7.6% versus the house price growth reported in Pretoria at 5.1% and just 2.6% in Johannesburg.
  • According to a very recent Lightstone Newsletter, the national average annual house price increase was recorded at 4.51% – but in the Low-Value segment higher at 6.8% versus the 4.8% recorded for properties in the mid-value price segments. Once again demonstrating the value of demand and supply driven by affordability.
  • Interesting to note that homes priced between R800 000 and R1.5m accounted for 26.2% of transfers recorded during the first quarter of 2022, whilst homes priced above R3m accounted for only 7.2% of transfers during that time.

However, our SA Property Market has always withstood the test of time and with buyers activity remaining strong in especially the lower and middle-priced segments, the general property sentiment does remain positive although the downwards price pressure and general affordability for the man in the street, has without any doubt taken a knock due to circumstances as highlighted above, creating a vicious circle effect across the board.

As mentioned in our previous monthly newsletter, we are virtually SOLD OUT AND URGENTLY NEED STOCK! Please be so kind to contact us should you wish to sell or know of somebody wanting to sell. It will be sincerely appreciated, and you can be assured to be properly thanked for your efforts!

Also refer to our latest and very exciting listing, e.g., this stately new listing on Edward Street:


Video Link:


barcode 101

Wishing you all just the very best and please stay in touch with our Heiberg Estates Team – always at your service on a 24/7 basis should you wish to sell, buy or let!!

With warm regards

Bambie & Heiberg Estates Team

Bambie Nuwe Signature




Compare Listings