The decision by the Monetary Policy Committee of the SARB (South African Reserve Bank) to keep the interest rate at the current level of 7% (home loan base rate of 10.5%) is a vital boost for stability according to Samuel Seeff, chairman of the Seeff Property Group.
He notes that economic and political stability is vital to get the economy and property market back on the road to recovery. Although it remains under pressure, we have seen some positive sentiment come through from the latest FNB Property Barometer, pointing to a marginal improvement and possibly slightly better year ahead for the market.
Inflation has also dipped from 6.6% in January to 6.3% in February. At the same time, the rand has strengthened and is in a much better position compared to last year, despite the instability around this week’s recall of Finance Minister, Pravin Gordhan from an overseas investor roadshow.
Seeff says that this bodes well for keeping the interest rate flat and possibly paving the way to a rate reduction later in the year as some economists have predicted.
He also notes that the global economic climate is now more positive with many first world and emerging economies starting to report upwards growth. In line with that, economists expect the local economy to take a turn for the better, but, says Seeff, as the last eighteen months have shown, it hinges on political stability.
Nonetheless, it remains business as usual for the property market and the flat interest rate will continue to support that. Although we are operating under overall slower trading conditions, save for the Cape that remains on a better footing overall, Seeff says that there are still plenty of opportunities for buyers, sellers and investors that is keeping the market ticking over.
Each region, city, town and neighbourhood is unique and Seeff therefore recommends that it is always best to consult with a local area specialist to find out what is in demand and at what price range. In a challenging economy and property market, the focus tends to shift to pricing in line with what buyers are prepared to pay. We see this clearly reflected with well-priced properties still attracting good interest.
In conclusion, Seeff notes that despite the strengthening rand, you can still find more value for your money in South African property compared to most other locations. Any improvement in the economy will boost the market, so we welcome the decision to keep the rate flat.