No rate hike a welcome boost for the economy and property market

Private Property South Africa

The decision by the Reserve Bank to retain the repo rate at the same level is a much needed boost for the economy and property market.

Chairman of the Seeff property group, Samuel Seeff, says that although the better than expected April CPI rate of 6.2% is marginally above the Reserve Bank’s target range of 6%, it is slight enough to support the MPC decision to the keep the interest rate flat.

There would have been no value in raising the interest rate right now given that the initial fears of rocketing inflation seems somewhat overstated. A rate hike does not serve the economy and the rate hikes have in any event done little to deter consumer spending.

In a more buoyant economy, a higher interest rate would be acceptable for a fair and balanced market, but as things stand, the economy would be better served by a stable interest rate, says Seeff.

The property market too could do with a bit of a boost although activity remains very satisfactory, he adds. While transacting below the levels of 2014 and early part of 2015, the market nonetheless remains fairly active. We have not yet seen the gloom and doom predicted at the start of the year, save perhaps for the mining towns.

Bear in mind though that there will always be people who need to buy for a range of reasons, a move for work or perhaps to downgrade or even upgrade to a better home or neighbourhood. This good news notwithstanding, rising interest rates and general living cost inflation is set to remain a challenge this year and Seeff urges consumers, home owners and buyers who have not already factored this into their forward planning, to start doing so.

As the year progresses and more stock comes onto the market, sellers will face increasing pressure to price competitively. On the upside, the decline in price growth seems to have halted for now according to the latest bank indicators. So, all-round, Seeff still sees a very satisfactory market.

All eyes will now be on the upcoming local elections with some expected shifts of power from the ruling part. This, adds Seeff, should hopefully be a strong signal that government needs to lift its game as poor service delivery, inefficiency, waste and corruption does not support economic growth.
And, without a good economy, we cannot expect a good property market.


Found this content useful?

Get the best of Private Property's latest news and advice delivered straight to your inbox each week

Related Articles

Good news for SA as repo rate remains unchanged
Following the November rate hike, the Seeff Property Group has welcomed the decision to keep the interest rate on hold as the right decision.
How the repo rate affects you
We help you better understand the Repo Rate, and how it affects your home and lifestyle.
National budget wishlist from the property experts
With the National Budget looming on 20 February 2019, the housing market needs a budget that will achieve a boost in sentiment and economic growth.
Rate hike as expected, but property market still remarkably resilient
Today’s interest rate hike is exactly as expected. What does it mean for the property market?