The announcement that the Reserve Bank’s Monetary Policy Committee (MPC) will retain the repo rate at the current level of 6,50% (base home loan rate of 10%) is welcome news and a relief for the struggling economy and property market, says Stuart Manning, CEO for the Seeff Property Group.
Given the recessionary outlook, renewed currency volatility and inflation creep, economists were divided ahead of the decision and Manning warns that this is likely to be a short-term breather as a rate hike may well come sooner than hoped.
In the meantime, this decision should encourage buyers still sitting on the fence to get into the market, he says. The flat interest rate, slow price growth, rise in property stock levels and positive bank lending landscape, makes it an excellent time to buy.
Those concerned about expropriation, should take comfort from the important assurances given by President Ramaphosa in parliament, meetings with the UK and China and agricultural bodies and stakeholders.
The Zimbabwe case never affected the residential market, and he says that SA is in stronger position with a robust constitution and institutions, civil rights organisations and interested parties including the banks, all playing a part towards a positive outcome in pursuit of economic growth and stability.
It is important to filter out the noise and misinformation and focus on facts, says Manning. It is still safe to invest in property. The president has been clear that there will be no wide-scale expropriation or nationalisation, property rights will be protected, and illegal land grabs will not be tolerated.
Although slower, the property market is nowhere near the worst levels of the 2008 Global Financial Crisis. Manning says further that Deeds Office data shows that thousands of transactions are concluded each month. Challenges are nothing new to SA; the economy and property market have at times had to deal with political instability, high inflation and interest rates of up to 16%-25%.
Although the buyers’ market is here to stay for the time being, Manning says it offers plenty of selling opportunities, provided the pricing is market related. Historically, property has outperformed inflation, and with such a desirable lifestyle and affordable living by international standards, there is no reason to wait, it is a great time to buy and invest.