DURBAN - The South African Reserve Bank’s Monetary Policy Committee (MPC) decision to retain the repo rate at 6,75 percent base home loan rate at 10.25 percent was announced yesterday.
The announcement comes after the increase last year November. Property companies Seeff Property Group and Pam Golding Properties have welcomed the decision by the Sarb.
Seeff Property Group
Seeff Property Group has welcomed the decision to keep the interest rate on hold as the right decision. We need stability so that we can get on with rebuilding confidence and the economy, says Samuel Seeff, chairman of the group.
Seeff says this is a “year of great expectation” and the decision to retain the rate is the right one. Although inflation is a concern, it is weighted by the reasonably stable rand, declining fuel price, and Moody’s keeping the sovereign credit rating and outlook stable with a gradual strengthening of institutions and increasing transparency.
Stability and a return to confidence is now vital. He adds further that the general sense is that once the May Election is out of the way and delivers a positive mandate for President Ramaphosa, and barring any further shocks, the economy and property market could start lifting more meaningfully by mid-year.
In the meantime, it remains business as usual for the “have to buy and have to sell” residential sector in the price band up to R1m-R1.5m to around R3m depending on the area. These buyers and sellers need to transact for various reasons, and buoyed by the fairly benign interest rate, this sector will continue ticking over despite sentiment. Here, well-priced properties can still sell within a reasonable timeframe, he says.
Given that the fundamentals in the property market will remain weak during the first half of the year with subdued demand, longer sales cycles and flat price growth, sellers, especially in the higher price categories will need to make their price attractive to catch the attention of buyers who have a lot more to choose from.
Pam Golding Properties
After an unexpectedly tough 2018, we the welcome announcement that the repo rate remains unchanged following this first MPC meeting of the year.
The year ahead is likely to be characterised by a number of highly significant events which could substantially impact the performance of the local residential property market, said Dr Andrew Golding, chief executive of the Pam Golding Property group.
“Locally, economic and residential activity appears to be rebounding modestly as buyers capitalise on sound buying opportunities in the current environment. While the ‘sweet spot’ in the residential property market continues to be the price range up to approximately R5 million or R6 million, we are seeing more buyers in the marketplace than a couple of months ago – most notably in high-demand nodes.
These are areas which have seen significantly improved activity in December 2018 compared with the same period in 2017, with uMhlanga even turning in record sales turnover during this period.
In fact, generally, there seem to be more buyers around than a couple of months ago, with the perception of property ownership as the basic cornerstone of wealth creation still holding good. From an affordability perspective, cash buyers are more opportunistic as they seek out good buys, while coastal areas are still regarded as a lifestyle choice by purchasers flush with cash.
The market consensus appears to be that activity will remain relatively muted this year, but fairly resilient nonetheless, and that growth in prices will remain in the low single digits – in all likelihood below the prevailing consumer inflation rate, suggesting that prices will decline in real terms. However, there are still pockets of growth, and an understanding of prevailing market trends is required to ensure a sound investment when purchasing a home.
“We believe that 2019 holds much promise, as elections and a positive result will drive sentiment and improve the economic outlook. Foreign investment is on standby and all things being equal we will see an increase in activity, given that we are a favoured world emerging market. If this occurs, the local property market will start to see significant improvements in activity.” concluded Golding.