Hold on tight to your home
The property boom is over, and homeowners should prepare themselves for a tough two years ahead.
Sizwe Nxedlana, a Standard Bank economist, said this yesterday after the release of the bank's residential property gauge for June, which further confirmed that there was no respite in sight for residential property.
In June, the median house price index slumped 11,3percent to R550000, from R620000 last June.
This means that homeowners cannot expect the same growth rates in the price of their properties that was experienced 36 months ago.
Unlike Absa, which reports a monthly average mortgage value, Standard Bank's house price index uses the mid - or median - value of the home loans it has granted during a month.
The bank said that in 24 months mortgage costs had increased by 36percent, after the June interest rate hike.
Two years ago the monthly cost of a R500000 mortgage - financed at the prime interest rate over a period of 20 years - was R4992. Today the cost of financing the same mortgage is R6769.
Nxedlana said residential property prices were still in negative territory, and the outlook for the residential property market remained bleak.
He said homeowners should brace themselves for even tougher economic conditions in the next 18 to 24 months, as the reality of further interest rate increases in August drew near, in addition to increased electricity tariffs, as well as food and petrol prices, that were negatively affecting household disposable income.