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Market experts say the unchanged repo rate, while somewhat disappointing, is by no means a disaster

The recent decision to keep the repo rate unchanged is regarded by some property players as disappointing, but they all agree that the current market conditions are still positive for property investment.

The prime lending rate remains at 10% and the repo rate at 6.5%. The decision to leave the repo rate unchanged is “definitely a signal” that the Monetary Policy Committee is satisfied with the country’s current economic status and is happy to adopt a “wait and see attitude with regard to balancing the growth of the economy versus keeping inflation under control”, says Mike Greeff, chief executive of Greeff Christies International Real Estate.

And its decision not to meddle with the economic status quo should be seen as good news for the property sector. “There has been some promising growth in the market and while it has not matched the growth of previous years, it is still a positive indicator. We have seen an increase in first-time buyers who are giving new impetus to what has been a fairly flat market.”

Greeff says the unchanged interest rate also gives confidence to foreign investors and adds to the perception of our economy being stable and an “excellent investment destination.”

Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa, says now is a “good time” to enter the propertymarket.

“The market works in cycles. We are experiencing negative house-price growth in real terms. But in the long term, market conditions will improve to yield positive house-price growth again. So buyers who purchase property now are likely to see much higher returns in the long run.”

South Africans should “make the most” of the sturdy interest rate by entering the market while real houseprice growth is “still slow”. Pam Golding Property group chief executive Andrew Golding says the “relatively low” interest rates continue to present sound opportunities for home buyers, particularly first-time buyers and others who need finance.

And it is hoped that the country may still see another reduction in the repo rate before the end of the year. “The property market is currently at or near the bottom of the current down cycle which makes this potentially an ideal time for savvy buyers to invest.”

Banks’ lending rates also continue to trend upwards, says Samuel Seeff, chairman of the Seeff Property Group, who agrees now is a good time to get into the market.

“After a fairly slow winter, agents are more positive with the onset of summer which is traditionally busier for most areas.” But not everyone is satisfied with the MPC decision. Goslett views the decision as “cautious” and “disappointing”.

“Our economy is already showing signs of recovery, reflecting a 3.1% growth in our GDP for the second quarter of 2019. With inflation dropping to 4% in July, the MPC could have seized this opportunity to further stimulate our economy by announcing a cut in interest rates.

Instead, the committee erred on the side of caution.” He feels a further interest rate cut would have increased market activity and driven up prices, which the property market needs to rectify the real house-price decline experienced since last year.

Golding agrees the unchanged repo rate is unlikely to stimulate increased activity in the property market. Rather, a further interest rate reduction, on the back of the previous cut in July, would have provided incentive for favourable buyer decisions.

“What is needed now is a meaningful confidence boost to offset the global and local macroeconomic and socio-political factors impacting on the market, jump-start the muted economy and create impetus in the property market.”

Seeff says there is “ample support” for a further rate cut. “The second quarter GDP growth of 3.1% was better than expected and inflation, despite slightly up to 4.3% in August, remains fairly benign and well within the bank’s target range of 3% to 6%.”


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