Interest rates shake up the Cape Town property market
In 2020, the property market saw interest rates move towards historic lows which opened up a window of opportunity for millennials to enter the first-time buyers' market in Cape Town. This assisted in keeping values propped up, particularly within the R4 million and under price bracket.
Fast forward to 2022 and a combination of high levels of inflation and rising interest rates has resulted in the millennial generation has slowly been pushed out of the first-time buyers' market across the board.
To illustrate this point, the quarterly PayProp Rental Index shows that rental growth rebounded in the first quarter of 2022, with year-on-year (YoY) growth of 1.5%,1.1% and 3% recorded in January, February and March respectively. March had the strongest rental- growth performance recorded since the start of the pandemic in March 2020.
Typically, net rental yields in Cape Town range between roughly 3% on the low end, and 7% on the upper end. With the increased rental demand, we expect the first-time buyers' market to be replaced by investors as yields rise, which will hopefully keep the sub-R4 million price range buoyant.
Since January 2022 to date, the Quay 1 International Realty residential rental team has let over 150 properties in the area this year to date. Generally the team experiences slower months around the middle of the year, however, this year has been an exception with demand continuing to increase, which is indicative of the above shift.
Interested to know what your property is worth in the current interest rate environment? Click here to generate a digital valuation, or to get in touch with an area specialist broker.