The surprise decision by SARB to cut the repo rate is good news for the property market but economic and political reforms are still needed.
The decision to reduce the repo rate by 25 basis points announced by the Monetary Policy Committee of the South African Reserve Bank (SARB) is most welcome news according to Samuel Seeff, Chairman of the Seeff Property Group.
That brings the repo rate down to 6.75% (home loan base rate of 10.25%) and will be a welcome saving for home owners and will certainly boost the property market, he says.
On the back of such good news, Seeff also once again renewed his call on the country to get its house in order. The lack of action and economic and political will is disappointing in view of the continued business confidence and economic decline. Seeff further notes that although there is still plenty of activity to keep the property market ticking over and it is still in a better position than post-2007/8, the market is shifting on the back of the poor political and economic outlook. Overall, he says, the market is slower with fewer sales, properties are spending longer on the market, stock levels are rising and price growth is slower and stalling in most areas outside of the Cape.
On the upside, the banks are still keen to lend and today’s rate decision is good news in that regard. The banks are though taking a more conservative approach to approvals and deposit requirements are on the rise.
That said, the Seeff group is seeing a higher approval rate compared to last year, so this is good news for buyers. The flat price growth, also means good buying conditions especially in Gauteng and other metros.
We hope to see some improvement in the demand on the back of the rate cut, but sellers still need to be aware of the shifting market conditions. Sellers will now need to get their house in order so to speak. Ensure your property is in the best condition possible, price it at the right level and grant a sole mandate to an area specialist if you are serious about selling, he says.
Most buyers now do their search online and will simply overlook your property if it is overpriced or listed by multiple agencies. Be mindful of not just turning down offers unless you are quite certain that you can wait. Buyers are also now looking for more negotiability.
On the whole, Seeff says that the market is still holding up and well-priced property is still attracting attention. Hopefully, today’s cut will provide a much needed boost for the market and the economy.