Stable interest rate could boost affordable housing demand
“The Monetary Policy Committee’s decision to keep interest rates unchanged is welcome news, particularly for the affordable housing sector.”
The Monetary Policy Committee announced on Thursday that interest rates would remain unchanged once again. This means that the repo rate will stay at 7% and the prime lending rate remains stable at 10.5%. Rates have stayed at their current figures for well over a year. Says Mike Greeff, CEO of Greeff Christie’s International Real Estate: “The holding of the current interest rate at 7% by the South African Reserve Bank brings relief to the real estate industry and allows potential buyers and current bond holders to plan with more certainty over the next few months. The lower than expected inflation rate (5.3%) could leave room for a welcome rate cut by year end.”
“The steady rates, along with the recent change in the transfer duty exemption to R900,000, should act as a catalyst in boosting the property market within the affordable housing sector – a sector that already outperforms all other sectors,” says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.
Goslett says 56.36% of properties sold during Q1 2017 were priced at R800,000 or less.
“The statistics bring to light the high demand for housing within the more affordable pricing brackets.”
He predicts that interest rates will probably stay where they are for the remainder of the year. Says Seeff Properties chairman Samuel Seeff:
“A flat interest rate and lower inflation gives more breathing space to consumers and home owners, and allows buyers to benefit from a rate saving and get slightly bigger bonds. This is good for the property market, which continues at a fairly balanced pace.”