By Phiwa Sikhondze
The recent decision by the Central Bank of Eswatini (CBE) to reduce interest rates has created a favorable climate for property investment, sparking new opportunities in the residential market.
In its latest monetary policy statement, the CBE lowered the interest rate by 25 basis points to 7.25%, a move that promises more accessible and affordable property purchases.
Lower interest rates translate to reduced mortgage payments, allowing a wider range of potential buyers to consider homeownership and property investment.
Realtors across the country are anticipating increased buyer activity following the cut in interest rates. Ellroy Johnston, Sales Team Leader at RE/MAX Real Estate Specialists Eswatini, highlighted how the reduction is reshaping the market and shared key advice for EmaSwati looking to invest in property.
“The interest rate cut is already playing a pivotal role in revitalizing the residential property market,” said Johnston. “We hope to see a noticeable increase in interest from first-time buyers, particularly those who had been held back by the high interest rates after the COVID-19 pandemic. This is a good sign for realtors, and it’s creating a more favorable environment for buyers.”
Johnston added that the interest rate cut has breathed new life into the residential property sector, offering a “long-awaited relief” to real estate professionals and investors alike. After a prolonged period of high interest rates that suppressed buyer activity, this reduction marks a turning point. He expects even greater demand for properties in various residential areas as interest rates continue to fall.
The reduced rates are particularly beneficial for first-time buyers. Johnston advised prospective investors to act while the market was favourable, but also emphasized the importance of financial preparedness.
He urged buyers to save diligently to cover the portion of the property’s value that banks do not finance, as financial institutions in Eswatini typically fund 70% to 80% of a property’s fair market value.
“My advice to EmaSwati is to save as much as possible before approaching a financial institution for a mortgage. In some cases, you’ll need to cover up to 50% of the fair market value out of pocket, especially when purchasing empty plots or properties with additional costs,” Johnston explained. “It’s essential to plan and build a strong savings cushion to avoid financial strain.”
Johnston also noted that buyers face additional challenges when purchasing undeveloped plots, which often require more upfront capital. Financial institutions are generally less inclined to fund the full cost of acquiring such properties, making thorough financial planning even more critical.
Looking ahead, realtors remain optimistic that continued interest rate cuts will sustain the current momentum in the residential property market. Johnston encouraged potential buyers to monitor the market closely and act while interest rates remained favorable.
“This is an ideal time for EmaSwati who have been sitting on the fence to take the leap and invest in property,” he said. “The market is growing, and as interest rates continue to drop, conditions will only improve for both buyers and investors.”
However, Johnston cautioned buyers not to rush into decisions based solely on favorable interest rate trends.
“While the market is advantageous now, it’s crucial for buyers to fully understand their financial situation and invest in properties that align with their long-term goals. Saving diligently and being patient will ensure they make informed decisions and secure good deals.”