The decision of the Monetary Policy Committee of the South African Reserve Bank to retain the repo rate at 7% (base home loan rate at 10.5%) for the second successive meeting, is the right decision for the economy and property market.
This is according to Seeff chairman, Samuel Seeff, who says that while the latest inflation data showed a slight upward trend, up from 6.1% in May to 6.25%, there is no compelling case for a further rate hike right now.
Seeff says an upward rate adjustment would add to the already negative economic sentiment and will most certainly serve as a dampener on the economy and property market.
“Consumers are already burdened with rising prices, and we are not seeing any overspending, so there is no real reason for a rate hike,” says Seeff.
“Stability and a positive outlook is what is now needed for the economy and country.”
Cash-strapped homeowners with mortgages, who are faced with inexorably rising consumer costs across the board, will be relieved at the decision today, says Dr Andrew Golding, CE of the Pam Golding Property group.
“Against the backdrop of a sharp spike in global political and economic uncertainty, including fallout from Brexit, comparably, South Africa’s outlook is encouraging,” says Dr Golding.
“Just this week Bloomberg reported an inflow of investment of a record R85.7 billion in the country’s stocks and government bonds in June – a trend which has continued in July.”
While the property market remains on a fairly even keel compared to last year, the energy has been taken out of the market. Save for the Western Cape that is still benefiting from semigration, Seeff says most other areas are now beginning to see a slowdown in activity and price growth.
Mortgage originator, ooba, has also reported a slowdown in bond applications, although the banks are still keen to lend to qualifying buyers.
Seeff says further, while there is still enough activity to keep the market ticking over, he is seeing very little steam and, outside of the Western Cape, anticipates a flat market for the rest of the year.
That is not to say that the market is dead.
“No, far from it. There are still plenty of buyers and, while well-priced properties are still attracting good interest, sellers need to be mindful of the market forces and slower price growth,” says Seeff.
“The winter months have been a bit slower than what we had hoped for, but we now start looking forward to the approaching summer months and traditionally busier periods for the market.”
“It also appears likely that new homeowners will remain a dominant force in the national housing market in general, and in the lower-price band below R1 million in particular, for the foreseeable future,” says Dr Golding.
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