Five ways to predict property price hikes

The dream of owning a home is often closely linked to financial security. However, the quest for the perfect abode has been on a transformative journey over the past few decades, whether as a residence or an investment. 

In this article, we delve into the factors influencing house prices, from the fundamental dynamics of supply and demand to the effects of rentals on the market, lending practices, and the importance of timing your property investments in the ever-evolving landscape of interest rates.

1. Supply & demand

The fundamental interplay between supply and demand lies at the heart of the real estate market. It's a simple equation: prices surge when demand for housing outpaces supply. The desire to find the perfect home is not unique to first-time buyers; seasoned investors and portfolio managers also seek opportunities within new developments, perpetuating this demand-supply imbalance.

Contrary to a common misconception, developers don't necessarily cause house prices to rise; they are often drawn to areas where prices are already rising. Developers act as confirmation that an area is attractive due to its existing profitability rather than the cause of rising prices.

2. The effects of rentals on the market

One of the factors exacerbating high house prices is the short-term rental market, driven by platforms that facilitate holiday rentals. The choice by homeowners to offer their properties for short-term lets year-round has led to a reduction in available properties for long-term renting. This decreased supply has, in turn, contributed to rising rental prices, which can put additional pressure on potential homebuyers.

3. Bank & lending

For many aspiring homeowners, securing a mortgage is a crucial piece of the puzzle. The ease of access to home loans, interest rates, and lending practices can significantly influence the property market. Real estate experts often recommend saving for a deposit to negotiate a lower interest rate. 

A lower interest rate can make home ownership more affordable, but it's also an incentive for buyers to enter the market. Leveraging financial opportunities and taking the leap into property ownership can have long-term financial benefits.

4. Learning to time the market

Some property experts suggest that timing the real estate market is vital. As interest rates are anticipated to decline, this could mark an opportune moment for first-time buyers who can afford real estate assets at current interest rates. 

However, waiting for the first rate cut might not be the most strategic move, as, by that point, the market dynamics may change rapidly. Acting sooner rather than later is emphasised for those looking to quickly make their mark in the market.

5. Recent interest rate trends

Interest rates play a pivotal role in the property market. South Africa is experiencing a shift from a high inflation-high interest rate cycle to a more manageable inflation scenario. As such,  experts foresee a decline in interest rates on the horizon. This makes it an opportune moment for prospective homebuyers to explore the market.

A common tendency is for people to delay their entry into the property market until they see the first rate cut. Unfortunately, it may be too late to capitalise on the opportunity fully by that point. Being proactive and entering the market before interest rates drop can yield significant advantages, as the market can change rapidly in response to shifting interest rates.

Taking these factors into account and making informed decisions can lead to financial security and real estate investments that stand the test of time. For those who are eager to turn their dreams of homeownership into reality, the key is to act sooner rather than later.


Contact Ikonic Real Estate today.

For Real Estate professionals you can trust and rely on for industry-related expertise, contact us below for more information.

If you are looking to live in Silver Lakes Golf and Lifestyle Estate, Silver Stream Estate, Lombardy Estate & Health Spa, The Ridge Estate, Six Fountains Estate, or Willow Acres Estate and surrounding areas, then Ikonic Real Estate is your preferred property practitioner to assist you in all aspects of the selling and buying process.

Office Number: 083 452 5599
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Email: martin@ikonic.co.za

Ikonic Real Estate holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.