Property Market By 2010
With the introduction of the National Credit Act as well as high interest rates, loans became difficult to get approved and people In 2009, the direction of the property market is largely defined by what is happening globally as well as politically in South Africa. A large number of South Africans had to sell their properties as they had exceeded their financial capacity by taking out too many bonds on existing properties and were unable to keep up with their bond payments in the wake of continually increasing interest rates. An inflationary cycle that started in June 2006 spurred the South African Reserve Bank's Monetary Policy Committee (MPC) to raise interest rates 10 times, or a cumulative five percent, until the repo rate was left unchanged at 12 percent in August 2008.
The National Credit Act (NCA) came into effect on 1 June 2007, which has made receiving a loan from any bank more difficult than in the past. Giving credit to consumers who are considered uncreditworthy puts banks in a position where they are at risk of being unable to finance debt as clients cannot pay their loans. Even though the sub-prime mortgage collapse in the United States sent the world economy into a liquidity crisis; South African banks were virtually unaffected and still considered to be some of the most stable in the world. Economists agree that as the global recession takes hold and economic growth comes under threat, interest rates will begin to decline prompting a revival in South Africa’s property market by the beginning of 2010.
The National Credit Act (NCA) came into effect on 1 June 2007, which has made receiving a loan from any bank more difficult than in the past. Giving credit to consumers who are considered uncreditworthy puts banks in a position where they are at risk of being unable to finance debt as clients cannot pay their loans. Even though the sub-prime mortgage collapse in the United States sent the world economy into a liquidity crisis; South African banks were virtually unaffected and still considered to be some of the most stable in the world. Economists agree that as the global recession takes hold and economic growth comes under threat, interest rates will begin to decline prompting a revival in South Africa’s property market by the beginning of 2010.
