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As prime lending rates rise in South Africa, paying off a bond has become even more difficult.
In March, the Monetary Policy Committee of the South African Reserve Bank (SARB) increased the country’s interest rates by 50 basis points, bringing the repurchase rate to 7.75% and the prime lending rate to 11.25%.
This marked the ninth hike in the current cycle, with a total increase of 425 basis points since November 2021 – the highest they have been in 13 years.
Since the start of the domestic rate hiking cycle, a person with a 20-year bond valued at R5,000,000 is now paying R13,698 more than they used to in September 2021.
As it stands, a person with a R5 million bond pays R52,463 a month at a prime lending rate of 11.25%.
Australia – a hotspot for emigration and a second home to many South Africans – has also been having a rocky interest rate trajectory taking its toll on the property market.
The International Monetary Fund (IMF) has ranked Australia as the second-highest country behind Canada for “housing market risk” out of 27 countries.
Its market is at risk due mainly to its high level of outstanding housing debt to income.
Forbes Advisor reported that according to recent data, the value of Australia’s housing market fell by -5% across capital cities in 2022.
“Sydney dropped by -10.9%, and Melbourne was down -5.9%. While Canberra and Brisbane house values fell by -1.1% respectively last year,” Forbes reported.
Despite this trend, the publication also added that experts believe that rising interest rates (similar to South Africa) were a key factor underpinning the property market’s downturn last year.
“Since it began raising interest rates in May of 2022, the Reserve Bank of Australia has increased rates for ten consecutive meetings, lifting the cash rate to 3.6%—before deciding to hold the rate steady at its April meeting,” reported Forbes.
BusinessTech looked at what you can get in South Africa vs Australia for R5 million:
Cape Town
3 Bedroom House for Sale in Rondebosch – R4,900,000
2 Bedroom House for Sale in Tamboerskloof – R4,900,000
Pretoria
3 Bedroom House for Sale in Waterkloof Ridge – R4,950,000 
9 Bedroom House for Sale in Lydiana – R4,900,000
Johannesburg
3 Bedroom House for Sale in Melrose –R4,950,000
4 Bedroom House for Sale in Emmarentia –R4,900,000
Durban
4 Bedroom House for Sale in Essenwood – R4,995,000
4 Bedroom House for Sale in Morningside – R4,950,000
Australia
Sydney
3 Bedroom for Sale in New South Wales – R4,871,062 (AUS400,000)
2 Bedroom sold in New South Wales – R4,871,062 (AUS400,000)
Melbourne
2 Bedroom apartment in Greater Melbourne Region – between R4,871,062 – R5,114,615 (AUS400,000 – 420,000)
2 Bedroom apartment in Melbourne Region – between R4,810,174 – R5,053,727 (AUS395,000 – 415,000)
Brisbane
2 Bedroom home for sale in Greater Brisbane Region – R5,175,530 (AUS425,000)
3 Bedroom home for sale in Greater Brisbane Region – R5,003,362 (AUS410,000)
Adelaide
1 Bedroom apartment for sale in Adelaide – R5,064,379 (AUS415,000)
3 Bedroom apartment for sale in Adelaide – R5,186,412 (AUS425,000)
Read: New property scam on the rise in South Africa
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