When interest rates rise, some home sellers naturally start to feel uncertain and wonder if they should withdraw from the market. There is often an assumption that prospective buyers will immediately retreat, that property demand will slump and that achieving a sale will become very difficult and take a long time.
However, that is not what we are currently seeing in South Africa’s residential market. While the recent interest rate increase does of course affect affordability calculations for most buyers, there is still strong positive sentiment in the market and demand remains healthy among many prospective purchasers.
Indeed, the latest Homeowners Sentiment Index from Absa shows that overall consumer confidence in the market has risen to 88%, the highest level recorded since the index was launched in 2015. It also shows that buying sentiment rose 3% in the first quarter of the year to 80%, and that confidence is particularly strong among younger people (aged 25 to 34) currently participating in the market.
Meanwhile, the latest statistics from mortgage originator BetterBond show that the number of home loan applications is currently 6% up year-on-year.
People still need homes, families continue to relocate, semigration trends are ongoing, and many buyers who delayed decisions during previous periods of uncertainty are now actively searching for the right property.
And what this all means for sellers is that withdrawing a home from the market simply because rates have edged up could mean missing a valuable opportunity.
The key to success in the current environment is not to panic, but to adapt. Sellers who work closely with an experienced property professional and position their homes correctly still stand an excellent chance of achieving a successful sale.
Pricing is particularly important right now. Buyers are still active, but they are also increasingly price- and payment-conscious. Most are calculating not only whether they love a property, but whether the monthly bond repayment will fit into their household budget without discomfort – and whether they can even qualify for the bond.
This is where experienced estate agents can add real value. Beyond helping to market a property effectively, they can guide sellers on what price points are likely to attract the widest pool of qualified buyers and what affordability thresholds buyers are working within at current interest rates.
For example, a home with an asking price of R2m would typically require a bond of around R1,8 million if the buyer pays a 10% deposit. At the current prime lending rate, monthly repayments on that bond would be around R18 000, meaning the buyer would require a gross monthly income of some R60 000 to qualify.
But if a seller wants to appeal to a broader market and increase their chances of securing an offer sooner rather than later, even a modest price adjustment can make a meaningful difference to those calculations.
In the example above, reducing the asking price by R100 000 would lower the required bond amount and cut the monthly repayment by close to R1 000. At the same time, the gross monthly household income needed to qualify for the bond would fall by more than R3 000, potentially opening the door to many more buyers.
In today’s market, affordability matters more than ever. Sellers who understand the financial realities buyers are facing, and who price accordingly, will be the ones who secure the quickest sales and the strongest offers.
In other words, rather than stepping back from the market because of a rate increase, sellers should focus on strategy. With the right advice, realistic pricing and professional guidance, there are still excellent opportunities to achieve sound sales.
