The decision by the Monetary Policy Committee of the SA Reserve Bank to keep the repo rate unchanged at the current level of 6,50% (base home loan rate of 10%) was largely expected by the market according to the Seeff Property Group.
The group said that given the still sluggish economy and pressure on the CPI due to rising costs and some renewed volatility in the currency, it was expected that the MPC would take a conservative stance. Seeff also expects the interest rate to remain flat for the remainder of the year.
Stuart Manning, group CEO for Seeff said that the economy has not yet seen a notable uptick although the overall sentiment is up following the appointment of President Cyril Ramaphosa. The early January surge has unfortunately been somewhat tempered by policy uncertainty around land expropriation. The recent announcement by the ANC’s NEC (national executive committee) that it will first test this with the Constitution‚ as it stands, is therefore most welcome, he said. President Ramaphosa also again reiterated in parliament this week that it will be done in pursuance of economic growth and food security.
Manning says further that the Seeff group remains buoyed by the more positive outlook and they expect the economy take a real turn bearing in mind though that consumers have had to absorb the VAT hike along with petrol price and other cost increases.
He noted that the Gauteng markets are picking up and that, for the first time in many years, there has been a surge in transactions above R20m in the top end Johannesburg areas. This, he adds, is a good indication that confidence is returning to the market. These markets are also usually the first to feel a recovery. The Cape metro on the other hand, is however now feeling the effects of the poor economy, drought, dip in tourism and semigration which means that most areas are reporting tight trading conditions, especially at the upper end of the market.
The country’s micro-economic challenges notwithstanding, Manning says there are many positives for the market. The banks are granting more bonds, price growth is still fairly flat and that means that it is a great time to buy. The lower to mid-market price ranges to around R1.5-R2.5m are quite active, but overall, Manning says that sellers need to price in the right range to catch the interest of buyers. The message for buyers, is not to wait too long, otherwise they may just look back with regret.
According to Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, the Monetary Policy Committee (MPC) has acted fairly in response to the current economic climate and that homeowners should not be disappointed with this, but should rather see it as one less thing to reorganise their budget around.
“It is better that rates remain unchanged to ensure that they continue to be sustainable in our coming economic climate. Smart citizens will make the most of these low interest rates while they last by investing in property now,” Goslett concludes.
Dr Andrew Golding, chief executive of the Pam Golding Property Group said although growth prospects of the South African housing market are improving, a “steady hand” is needed from the South African Reserve Bank regarding the repo rate.
IMAGE SOURCE: businesstech.co.za