Today, the South African interest rate is the lowest it has been in almost 50 years, and a lower interest rate has a positive knock-on effect for the economy as a whole.
The South African Reserve Bank’s decision to lower the interest rate by a further 1% in April was made in a bid to increase consumer spending power and ease financial burden.
In all likelihood, the interest rate will potentially drop by a further half percent by year end and then remain stable for the next few years, creating a unique opportunity for property investors across the country. Not only will bond repayments on existing properties come down, but many people will see their affordability increase as well, thereby giving many the chance to gain a foothold in the property market.
Located in one of SA’s best estates, Lush is a sectional title development designed for a price sensitive market – those who do not want to buy land and build a home, but would like the lifestyle and benefits of living within Elaleni Coastal Forest Estate. This coupled with the lowered interest rate and future value growth based on current data, means Lush investors could walk away with money in hand when and if they do decide to sell. This money in hand would be earned through price growth achieved as well as long-term interest savings, and the savings are remarkable. Now, for every R1 million you borrow on a bond, you will be spending R1200 less a month, to service that bond. This is unprecedented, and if you do your calculations from January 2020 to now, your cumulative savings would be almost R4 000.
|PURCHASE PRICE LESS DEPOSIT|
|2-bed, 2-bath Fever Block apartment||R2 475000||R2 475000||R2 475000||R2 475000|
|JAN 2020||MAR 2020||APR 2020||PRIME RATE LESS HALF %|
|BOND REPAYMENT||R 23 476.00||R 21 872.00||R 20 318.00||R 19 562.00|
|CUMULATIVE SAVINGS||+ R1 604||+ R3 158||+ R3 914|
Due to the huge savings on bond costs, it is evident that there is no better time to invest into a property development that is well placed and demonstrates price growth.