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Cape Town - Seeff chair Samuel Seeff, has reacted with disappointment to the decision by the Reserve Bank’s Monetary Policy Committee (MPC) to hike the repo rate by a quarter percent to 5.75%.
"While it is widely accepted that the economy is heading into a rate hike phase and this is not unexpected," said Seeff.
"Insofar as housing is concerned, holding off on a rate hike for a little longer would have been preferred."
He said, considering that the housing market is finally on the mend, this is just too soon and will certainly do little to instill investor confidence or encourage economic growth.
"Already, consumers have had to absorb the 50 basis point hike of January and, considering that more than 85% of buyers require home loan finance, this is bad news for home owners and buyers," he said.
For consumers, their monthly bond repayment is the single largest expense. A home owner (or prospective buyer) with a bond of around R890,000 over a 20-year repayment period would have had to allow for an additional R284 per month following the January rate hike.
Add to this, the knock-on effect on other credit commitments and day-to-day living costs.
"Now, they will need to find an additional R177 per month (almost R500 extra since the start of the year) just to meet their basic home loan commitments. It is difficult to see how consumers can reduce their overall debt levels, let alone save for a house deposit," he said.
Seeff also believes that there is just too much uncertainty around the economy and rate hikes right now.
While the residential property market in South Africa absorbed and adjusted to the January (2014) interest rate hike relatively seamlessly, there were concerns that inflationary pressures and the stance expressed at the previous meeting of the Monetary Police Committee would see the repo rate recommence on an upward cycle – as has transpired, said Dr Andrew Golding, CEO of the Pam Golding Property group.
“Although not unexpected, the increase in the repo rate by 25 basis points following this week’s MPC meeting, is unfortunate news for homeowners, as well as the growing contingent of aspirant, first-time buyers.
It will ultimately be most felt by those who are already feeling the pressure of rising utilities costs and erosion in real household disposable income.
“This year the residential property market has performed strongly in all sectors," said Golding.
"The Pam Golding Property group notes increased consumer and investor confidence across all price bands - including the luxury homes market upwards of R10m and beyond," said Golding.
"The top end of the market has led the way, but we have also seen a resurgence of a young generation of purchasers - mainly singles and young couples or families, acquiring their first homes."
Encouragingly too, there are also signs of significant progress being made in regard to the backlog of distressed sellers, which resulted from the recession, he said.
"While it is widely accepted that the economy is heading into a rate hike phase and this is not unexpected," said Seeff.
"Insofar as housing is concerned, holding off on a rate hike for a little longer would have been preferred."
He said, considering that the housing market is finally on the mend, this is just too soon and will certainly do little to instill investor confidence or encourage economic growth.
"Already, consumers have had to absorb the 50 basis point hike of January and, considering that more than 85% of buyers require home loan finance, this is bad news for home owners and buyers," he said.
For consumers, their monthly bond repayment is the single largest expense. A home owner (or prospective buyer) with a bond of around R890,000 over a 20-year repayment period would have had to allow for an additional R284 per month following the January rate hike.
Add to this, the knock-on effect on other credit commitments and day-to-day living costs.
"Now, they will need to find an additional R177 per month (almost R500 extra since the start of the year) just to meet their basic home loan commitments. It is difficult to see how consumers can reduce their overall debt levels, let alone save for a house deposit," he said.
Seeff also believes that there is just too much uncertainty around the economy and rate hikes right now.
While the residential property market in South Africa absorbed and adjusted to the January (2014) interest rate hike relatively seamlessly, there were concerns that inflationary pressures and the stance expressed at the previous meeting of the Monetary Police Committee would see the repo rate recommence on an upward cycle – as has transpired, said Dr Andrew Golding, CEO of the Pam Golding Property group.
“Although not unexpected, the increase in the repo rate by 25 basis points following this week’s MPC meeting, is unfortunate news for homeowners, as well as the growing contingent of aspirant, first-time buyers.
It will ultimately be most felt by those who are already feeling the pressure of rising utilities costs and erosion in real household disposable income.
“This year the residential property market has performed strongly in all sectors," said Golding.
"The Pam Golding Property group notes increased consumer and investor confidence across all price bands - including the luxury homes market upwards of R10m and beyond," said Golding.
"The top end of the market has led the way, but we have also seen a resurgence of a young generation of purchasers - mainly singles and young couples or families, acquiring their first homes."
Encouragingly too, there are also signs of significant progress being made in regard to the backlog of distressed sellers, which resulted from the recession, he said.
