09 February 2024

The residential property market in South Africa has been a landscape of constant change, and numerous challenges in recent years. However, some of the trends seen in the latter half of 2023 point to a unique set of opportunities for savvy home buyers in the coming year. The consensus view that the Reserve Bank will move to lower interest rates in 2024 means that the market could be on the cusp of a significant shift that could spur growth in house price inflation, which could unlock real long-term value for owners and investors, particularly in the mid-value property bracket.

 Throughout last year, increasing interest rates led to a cooling down of house price inflation. Interestingly, though, the third quarter of 2023 brought a surge in property sales within the mid-value range, specifically homes priced between R250 000 and R700 000. This is a key segment as it is expected to benefit most from the forthcoming interest rate shifts and anticipated economic changes. For buyers, this makes the next few months a very strategic time, because buying a property in this price bracket now could result in good capital appreciation over the coming years as the market responds to the easing of interest rates.

 Another factor that has undoubtedly buoyed growth in the mid-value property markets recently is the willingness by many banks to offer buyers – especially first-time buyers – loans of more than 100% of the value of the properties they want to buy. This has not only sparked growth in this bracket but has also contributed to a slight decline in the high-value (R700 000 to R1.5 million) and low-value (<R250 000) brackets.

Nedbank makes it easier to benefit from increasing property values in 2024

Amid these shifting market conditions, Nedbank’s HomeVision solution has emerged as a pivotal service for potential residential property buyers, particularly in the mid-value bracket. The offering is tailored to address the financial commitment that property ownership demands by allowing buyers to register a bond that is higher than the required loan amount to buy the property. This provides qualifying buyers with the option to access up to 30% more than the agreed property price (capped at R7,5 million), which can be very useful to cover the many costs involved in acquiring a home, and maintaining or improving it once you take ownership.

 Unsurprisingly, given the value it adds, HomeVision showed exceptional market appeal in 2023, as demonstrated by a conversion rate above 50% for 6 months within the first 10 months and an impressive R2 billion granted in HomeVision loans between March and December 2023.

 According to Nedbank’s Executive of Asset Ownership, Stephan Potgieter, the HomeVision philosophy not only aligns with Nedbank’s purpose to use its financial expertise to do good, but it is also part of a broader strategy by the bank to help more South Africans achieve the financial security and wealth-building potential of home ownership, without the initial financial pressures that often accompany a property purchase.

 “Our innovative HomeVision offering aligns with Nedbank’s understanding that property ownership is a long-term financial commitment,” Potgieter says, “and it is designed to help our clients plan for any eventualities, without the need to seek out additional loans or second bonds down the line, thereby maximising the long-term value growth of their largest asset.”

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