CAPE TOWN – South African Reserve Bank (Sarb) Governor Lesetja Kganyago announced today that the monetary policy committee (MPC) decided to reduce the repurchase rate by 25 basis points to 6.5 percent per annum.
Chief executive of Galetti Corporate Real Estate, John Jack stated that this move is welcomed by the commercial property sector, but it may not stem the tide against falling property values warns property experts.
John Jack said in a statement: “The rate cut by 25 basis points to 6.5% is a good stimulus for the commercial property sector but we also need to see real GDP growth to halt the rising vacancy trend.”
Jack explains that it will help add more money in property owner’s pocket because the rate cut reduces the cost of debt giving landlords the ability to service more debt or appropriate rental income to pay down the bond - or in the case of no income, the reduced interest rate causes less of a hole in the income statement.
“Everyone welcomes a lower bond repayment when incomes are under pressure,” said Jack.