Property Perspective - Buy Now - The Market Is Ripe

What a time it is to buy along the KZNNorth Coast. This amazing buying window has been extended by the prime interestrate remaining stubbornly high at 11,75%. A glance at the key economicindicators provided by the SA Reserve Bank shows the Repo rate at 8,25% withthe review on 27th March expected to remain unchanged for now.

Most economists and banks are advising thatthey only expect interest rate relief in the second half of 2024 and into 2025.The CPI inflation rate is currently at 5,6% and the PPI inflation rate(producer prices) is at 4,7%. As long as the PPI is below the CPI there is lessproducer price inflationary pressure on the CPI and this should translate intoa lower CPI over time.

Why is this important to you and me? TheReserve Bank aims to keep the CPI in a range of 3-6% and uses the cost of moneyor interest rates to manage this in the economy.

For our mortgage rates and interest chargedon any consumer debt to decrease, the Reserve Bank Monetary Policy Committeemust satisfy themselves that inflationary pressure has eased enough to warranta decrease.

As professional property practitioners, wehave been watching this play out in anticipation of a decrease in rates as weall know that the cost of money drives demand in the market. Even for thosecash buyers not relying on mortgage finance, their income streams are typicallyimpacted by the cost of money.

Financial distress in an economy usuallytakes a period to peak and this often happens once things have started toimprove as people hold on hoping for relief but become fatigued the longer therecovery remains and then are forced into a position to sell even if theeconomy is showing signs of improvement.

FNB's latest Property Barometer Reportprovides insight into House Price growth remaining low at 0,7% year on year forFebruary 2024 but the surveyed data shows buying activity improving over thepast few months.

The average time properties remained on themarket for sale nationally was shorter in the first quarter of 2024, averaging10 weeks and 6 days (76 days) from 11 weeks and 4 days (81 days) in the lastquarter of 2023.

Unfortunately for KZN, the average time onthe market lengthened by one week and four days to 11 weeks and five days (82days). FNB reported that the Reasons for Selling, with financialpressure-induced sales have receded in the first quarter and now average 19.3%of all sales and below the reason of "downscaling with lifestage" which is theleading reason at 22.4% of all sales.

Interesting "relocation" within SA(semi-gration) as a reason is as high as 13.2% and up from 11% previouslyindicating that the semi-gration trend fueling sales in the Western Cape,Plett, and KZN to some extent can be expected to continue.

For the astute property investor, thewindow of opportunity over the next quarter is to seek out those financiallydistressed properties offering below-market pricing. The banks remain active inthe mortgage market with competition between them for market share ensuringconsumers are likely to get the best possible deal available.

We have a range of these best buyopportunities for sale. I would encourage you to consider using the secondquarter for buying research and closing on those opportunities that arescreaming value.