The recent surprise drop in interest rates has further buoyed the property market at Century City which is reporting a significant uptick in residential sales inquiries.
So says Brian Usher of Property World, the official on site estate agency which undertakes all new development sales as well as a large portion of the resale market in the suburb.
The Reserve Bank surprised the market last month when it announced a 50 basis point cut in the Repo Rate to 5% effective from July 20 2012. The commercial banks followed suit reducing the mortgage rate from 9% to 8,5%.
Usher said the latest drop in interest rates had brought the mortgage rate to the lowest it has been in almost 39 years. “And, according to Absa, it has made mortgage repayments on home loans about 35,9% lower than they were in December 2008 when the mortgage rate was 15,5%.”
He said the fact that the lower interest rate was boosting affordability was partly behind the re-emergence of first time homebuyers as well as investors in the property market.
“We have also seen visitor numbers at our show houses increase substantially since the announcement and there has definitely been a strengthening of confidence in the property market.” Usher said that while it was perceived to be unlikely, market commentators had not completely written off the prospect of a further cut in interest rates.
“Richard Cardo, who heads up the property mandates at Investec Wealth & Investment, says that going forward it was unlikely that long bond yields, which are already trading below their historical average range, can decline much further and that although South African interest rates are at a historically low level, the forward rate market is pricing in a 40% chance of another 50 basis point rate cut this year.” Usher said they were optimistic for the year ahead.
“The past year, where we notched up 195 residential sales for a total of around R320million, was the best we had had in five years and we are forecasting to better these numbers in spite of an expected lower average selling price. The value of sales in the past year was driven up by the fact we had some very high end new developments with average selling prices of around R4million to R6million whereas much of the new stock in the planning stages is more affordable and aimed to meet the demand, in particular, of young families wanting to relocate to Century City to be near the new Curro school that opens in January 2013 and high bandwidth users who want to take advantage of Century City’s cutting edge, open access fibre optic network which is enabling the country’s fastest voice, broadband and multi-media services.”
For further information contact Brian Usher on 021 555 0105.