Lindokuhle Khumalo, Dimpho Keretetse , Thabea Mokobane, Ntwanano Hlekane, Chioma Okoro
Abstract
The influence of interest rates on the financial stability of the residential property market is multifaceted, affecting both market dynamics and debtor behaviour. Research indicates that rising interest rates lead to significant instability, necessitating strategic interventions to mitigate adverse effects. The research explored interest rates as a critical factor in the influence on the financial stability of the residential property market in South Africa. Despite extensive research on the global housing affordability crisis and interest rate impacts, limited emphasis has been placed on the South African context. A systematic literature review used literature from Scopus and Emerald databases to identify peer-reviewed journals, eBooks and conference papers from 2019-2024. Content analysis of multiple studies revealed that economic factors like inflation, GDP, and political risks significantly influence the residential property market in South Africa. The study’s findings indicate that the relationship between interest rates and housing prices has evolved since the 2007 financial crisis, and the unique monetary policy scenario in South Africa challenges the effectiveness of interest rates in facilitating price stability and economic growth. The study highlights the significant link between financial stability and interest rates in the South African residential property market, posing significant economic and policy implications. The study offers crucial insights for policymakers, homeowners, and investors to make informed decisions to mitigate interest rate risks and ensure financial stability in the housing sector. The study’s execution was hindered by limited public domain and search engine material, and future research should focus on analysing interest rate risk’s impact on real estate pricing and market dynamics particularly in South Africa.