To buy or not to buy? – that is the question

TRYING to time the property market is a common approach among prospective buyers, particularly in an environment of uncertain interest rate movements and rising living costs.

- NICOLA MAWSON

South Africa's residential property continues to gain in value. BetterBond's April Property Brief notes that the market "is showing signs of recovery, with home loan applications rising and buyer activity gradually improving". Home loan applications recorded by BetterBond increased 9.7% in the first quarter.

Quarter-on-quarter, this translates to an "impressive" gain of 9.7%, especially considering the muted levels of household income that usually follow the preceding quarter due to year-end bonuses being paid. Year-on-year growth was 6.1%.

But tougher times may lie ahead. "Improving fundamentals are supporting renewed activity in the property market, but elevated geopolitical risk continues to influence confidence, interest rates and the pace of recovery," says BetterBond CEO Stephan Potgieter.

The ongoing conflict in the Middle East is driving market volatility, placing pressure on fuel prices and delaying further rate cuts, BetterBond notes.

This uncertainty is reflected in forward-looking expectations. Investec chief economist Annabel Bishop says market expectations "have now brought forward the interest rate hike expectation from July to May," indicating a potential increase of around 0.25 percentage points.

Independent economist Roelof Botha adds that "the level of geopolitical uncertainty has emerged as a significant non-economic force influencing asset prices and market behaviour".

Against that backdrop, property prices continue to climb.