21 September 2017

South Africa: Mixed Reaction From Real Estate Industry to Sarb Decision

The decision by the SA Reserve Bank's Monetary Policy Committee on Thursday to keep the repo rate unchanged at 6.75% received a mixed reaction from the real estate sector.

The decision means the home loan base rate will remain at 10.25%.

Samuel Seeff, chair of the Seeff Property Group, said he hoped to see a decrease of 25 basis points.

"At a time of poor business confidence and weak economic growth marred by political instability, a further rate cut would have been an important boost for consumers and the market," said Seeff following the announcement by SARB governor Lesetja Kganyago.

"There was certainly every reason to expect a rate cut given the better than expected economic growth of 2.5% in the last quarter and the relative stability of the inflation rate in the targeted 3% to 6% range," he said.

While the overall property market was still in a much better place than it was following the 2007/208 global housing crisis, Seeff said persistent weak economic fundamentals were having an impact.

"Much of the liquidity is now out of the market and it is becoming harder for agents to transact. Properties are taking longer to sell and buyers are hesitant" he said.

Andrew Golding, chief executive of the Pam Golding Property Group, agreed that SA's housing market would have benefited from a repo rate cut.

In his view, a reduction would have given a boost to economic activity and growth in the residential property market."Action is needed to help kick-start the economy and boost confidence in general. (A reduction) would have prompted many home buyers who are currently sitting on the fence to commit to purchase decisions," he said.

Relief

Othe real estate agencies were more sanguine about the rate remaining stable.

Mike Greeff, CEO of Greeff Christies International Real Estate said the MPC's decision to leave the current interest rate unchanged was a relief.

"We're seeing a stock shortage, as well as a slight levelling off of house selling price growth, but demand is still high in the Western Cape and unlikely to drop, which means property values will continue to grow," said Greeff.

"A drop in the repo rate would have been very welcome, but maintaining the status quo is also positive, as it sends a strong message of stability to the market, and this is very important in the current economic climate."

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, said that, considering the rates had only been cut three months ago, keeping them steady was a decision most would have expected.

With waning consumer confidence, he expected property transactions to remain constrained.

"Until there is improved economic growth and higher numbers of consumers with the required affordability ratios necessary to purchase property, the property market will remain restrained," said Goslett.

Bruce Swain, CEO of Leapfrog Property Group, said he was heartened by the MPC's decision, saying it would give home owners a little more breathing room.

"Our consistent message these owners continues to be 'save, save save'. South Africa isn't out of the red yet and home owners would be well advised to pay extra funds into their bonds, as and when possible to insure them against any unexpected increases going forward," he said.

Jacques Fouché, CEO and founder of IGrow Wealth Investments, said even though the interest rate remained unchanged, it was still an excellent time to invest in buy-to-let property.

He said the SA property market remained resilient, offering a great return on investment,

Source: Fin24

South Africa

Zuma Fires Critical Communist Leader From Cabinet

President Jacob Zuma has fired his tertiary education minister, South African Communist Party (SACP) leader Blade… Read more »

Copyright © 2017 News24Wire. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 800 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.