Interest Rate Hikes don't necessarily Spell Doom and Gloom for Property Owners or Buyers

It's no secret that there are concerns surrounding the current spate of interest rate hikes by the Reserve Bank. But these increases should not be seen as a deterrent to property owners or potential buyers.

This is according to Eberhard Kruger, Franchise Owner of Harcourts Winelands, Harcourts Atlantic and Harcourts Ikhaya, who acknowledges the impact of interest rate hikes on bond rates and recognises the apprehension among property owners and buyers. However, he urges stakeholders to consider the necessity of these measures in curbing inflation and maintaining financial stability.

"Interest rate hikes are a reflection of economic conditions and are deemed necessary, even if not universally agreed upon," says Kruger. "Rather than question their necessity, we should focus on finding solutions and providing guidance to property owners and potential buyers during these times."

Kruger offers the following advice for property owners:

1. Don't sell unnecessarily: It is important to remember that the current interest rate hikes are a return to normalcy after a period of decreases prompted by the COVID-19 pandemic. The rates are still far from the levels seen during the peak of the 2008 market crash. Property owners should consider selling for the right reasons and not be deterred by concerns about their property value. There are still willing buyers in the market prepared to pay fair prices.

2. Revise your asking price: With higher interest rates, the pool of potential buyers may shrink. Property owners should ensure their asking price is realistic and not inflated. Seek advice from experienced property agents in the area to determine the appropriate price for your home. Qualified buyers are still active, and aligning the price correctly will attract the right buyer.

3. Speak to your bank: Banks understand the challenges faced by property owners during interest rate hikes and are often willing to explore flexible solutions. Engage with your bank to discuss payment gaps, extended bond periods, and potential alternatives to avoid unfavorable scenarios.

4. Consult Financial Advisors: Financial advisors can provide valuable insights and potential solutions, such as debt consolidation, during lean times. Their expertise can help safeguard your wealth creation and it is worthwhile seeking their advice.

For potential buyers, Kruger offers the following advice:

1. Ensure you are qualified: Due to higher interest rates, buyers who qualified for a bond in the past may need to reassess their qualification status. It is crucial to determine if you are still a qualified buyer and factor in the potential for future interest rate hikes. Inflationary factors, such as load shedding and energy costs, may contribute to further rate increases.

2. Take advantage of accurate prices: In times of market pressure, sellers often work with their agents to adjust property prices to align with market conditions. This creates a buyer's market and presents excellent opportunities to find property bargains.

3. Property as a solid investment: While many market investments remain highly volatile, property continues to be a stable and lucrative long-term investment. The Western Cape, in particular, has seen increased demand from both local and foreign buyers, making it a premium location for property investment.

Kruger concludes, "Proceed with caution but not with pessimism. Harcourts Winelands is here to guide you through the process of selling or buying, which is likely to be one of the most significant assets in your portfolio."