Property Flash


July 24 2023

The decision by the Monetary Policy Committee to keep the repo rate unchanged at 8.25% with the prime and base home loan rate at 11.75%, was a welcome reprieve for the economy and property market.

Samuel Seeff, chairman of the Seeff Property Group said it was the right decision to take given how the cost of living is rising across the country.

“It was the correct decision given that inflation has, against expectation, been coming down rapidly over the past three months to 5.4% in June and is now within the Bank’s 3%-6% target range. The Rand-Dollar rate has also strengthened,” he said.

High interest rates are stymieing economic growth and driving unemployment and higher debt levels.

“The higher interest rate has done more harm than good. The bank should now be looking at lowering the interest rate,” said Seeff.

High interest rates have driven down property sales volumes even in the Western Cape market, which had been strong.

The market is now challenging for sellers and first-time buyers. We are now undoubtedly in a buyer’s market. The effect is that sellers will now really have to focus on pricing accurately to attract buyers.

House prices are trading relatively flat while the banks are still lending, albeit that buyers must now budget for the higher interest rate. This is similar to the period before the 1994 elections and the 2008 Global Financial Crisis.

High Street Auctions’ director, Greg Dart said the unchanged repo rate was great news.

“An 11th successive rates hike would have been a step too far for South African consumers already battling extremely high food prices and an electricity price increase at the beginning of the month that put substantial pressure on already tight household expenditure,” he said.

“In an interview earlier this week Finance Minister Enoch Godongwana said the Reserve Bank would base its prime lending rate decision today on what was necessary to curb inflation. Thankfully, the latest figures from Stats SA were good,” said Dart.

On Tuesday, Statistics SA reported that consumer price inflation had slowed dramatically to 5.4% in June from 6.3% in May. This is the first drop below the Reserve Bank’s maximum target of 6% since April last year.

Mortgage holders will now need time to recover from the economic backslide they’ve faced since the upward rates cycle started which means it would be ideal to see the prime lending rate remain stable for the remainder of the year.

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