Horizon Capital Residential (HCR) welcomes the further interest rate reduction of 50 basis points announced by the Monetary Policy Committee on 21 May 2020. This marks the 4th reduction in the prime interest rate in 2020, a cumulative drop of 2.75% since the beginning of the year. Factoring in this recent reduction of 50 basis points, the prime lending rate is at a historically low level of 7.25%, which underpins the performance of the residential property market going forward.
It has no doubt been a challenging start to the year, characterised by tough market conditions even before Covid-19, but a cumulative drop in the prime lending rate of 2.75% provides stimulus to the market and results in increased affordability and improved consumer confidence. As an example, the monthly mortgage loan repayment on an apartment with a purchase price of R2,500,000 has reduced by approximately R4,000 a month since the start of 2020 when the prime lending rate was still 10%. This lower mortgage loan repayment benefits not only owner occupiers, but also investor buyers looking to rent their apartments out on a short-term or long-term basis.
Note: Assumes a 10% deposit & a loan term of 20 years
When interest rates were reduced to 7.75%, we saw a marked increase in sales enquiries. Despite the uncertainty in the market, particularly around Covid-19 and the lockdown, the sales team at HCR is in the process of finalising a number of sales in our City Bowl apartment blocks, with 3 confirmed sales in The Cedar since the lockdown, our 2nd residential development in Oranjezicht. A number of these sale enquiries have been from international investors and with the Rand at a favourable level for foreign investors, we expect this trend to continue. The large volume of these new international enquiries also provides a vote of confidence in the long-term prospects of prime Cape Town property.
With the prime lending rate at a historically low level of 7.25%, now is the perfect time to secure an apartment in one of HCR’s latest developments, The Cedar. Our uniquely structured rental investment package is available to the first 5 purchasers (on the first or second floor) allowing investors to take advantage of the next property boom with a “nil” mortgage loan instalment until January 2023. This is achieved by renting the apartment out and HCR subsidising your monthly mortgage loan instalment for a period of 12 months from transfer. Alternatively, the owner-occupier or Airbnb entrepreneur, can claim a Weylandts furniture voucher of R100,000 on transfer (T&C apply). To find out more visit: www.TheCedar.CapeTown or Contact David Sedgwick (072 385 4386), Catherine Bond (074 384 3127) or Maxine Mattern (078 452 5559).