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Cape Town - While inflationary concerns and global economic impacts remain in the spotlight, the Monetary Policy Committee’s stance to increase the repo rate was unexpected, particularly given the sluggish economic growth currently experienced in South Africa, according to Andrew Golding, chief executive of the Pam Golding Property group.
Despite this, the residential property market continues to reflect increasingly positive market sentiment and activity, he said.
This is fuelled by the fact that the market – including both buyers and sellers – has realigned itself in accordance with current trading conditions and the more exacting bank lending conditions required of purchasers.
“Despite the challenges facing the economy, there are a number of positive factors evident in the residential property market," he said.
"From a Pam Golding Properties’ perspective we are seeing a growing readiness and appetite among buyers to commit to purchase decisions."
While deposits of some 10-20% are generally the order of the day, as far as the mortgages are concerned, bank lending criteria in certain categories of prospective homeowners have eased to some extent.
"Furthermore, the natural ebb and flow of movement in the market has resumed, as people go about their lives and business and enter into property transactions as their situations or lifestyles change for a variety of reasons,” said Golding.
While sellers in general are more receptive to ensuring that their properties are realistically priced in order to sell, some areas, mainly in major metropolitan centres, are enjoying a high demand, resulting in stock shortages.
Golding said Pam Golding Properties observes that developers continue to enter the market, with products designed and geared to suit market requirements in popular locations.
“We remain optimistic about the performance of the residential property market in 2014,” he said.
Lew Geffen, chair of Lew Geffen Sotheby’s International Realty, said the decision to increase the benchmark interest rate by 0.5% to 5.5% has been expected.
“The South African economy is in a period of sluggish growth as it recovers from the recession and the Reserve Bank’s decision should signal confidence in the South African economy and encourage foreign investors to leave their money in the country," he said.
“The prospect of substantial increases in inflation necessitates a rate hike to avoid artificial pressure being put on consumers."
He said this is unlikely to have an immediate effect on the residential property market, which is currently in a slow boom period after a year of massive shortages of sale stock.
"It does signal a warning to buyers, though, not to purchase property at the upper limit of what they can afford, because interest rates are unlikely to remain this low in the medium term," he said.
"As long as they can anticipate a total of 3% rate increase over the next few years and can sustain the affordability, they will be OK.”
Disappointment
Seeff chairperson Samuel Seeff, has reacted with shock and disappointment to the announcement to increase the repo rate.
"For the first time in five years, we have seen more balance in the housing market with buoyant demand and increased sales volumes in the major metropolitan areas," he said.
"This hike is premature and is not related to the excessive demand in the market. It is unlikely to make a real difference other than to cool the economy and impact on the current positive sentiment in the housing market."
- Fin24
* Calculate your new monthly mortgage repayments with our bond calculator.
Despite this, the residential property market continues to reflect increasingly positive market sentiment and activity, he said.
This is fuelled by the fact that the market – including both buyers and sellers – has realigned itself in accordance with current trading conditions and the more exacting bank lending conditions required of purchasers.
“Despite the challenges facing the economy, there are a number of positive factors evident in the residential property market," he said.
"From a Pam Golding Properties’ perspective we are seeing a growing readiness and appetite among buyers to commit to purchase decisions."
While deposits of some 10-20% are generally the order of the day, as far as the mortgages are concerned, bank lending criteria in certain categories of prospective homeowners have eased to some extent.
"Furthermore, the natural ebb and flow of movement in the market has resumed, as people go about their lives and business and enter into property transactions as their situations or lifestyles change for a variety of reasons,” said Golding.
While sellers in general are more receptive to ensuring that their properties are realistically priced in order to sell, some areas, mainly in major metropolitan centres, are enjoying a high demand, resulting in stock shortages.
Golding said Pam Golding Properties observes that developers continue to enter the market, with products designed and geared to suit market requirements in popular locations.
“We remain optimistic about the performance of the residential property market in 2014,” he said.
Lew Geffen, chair of Lew Geffen Sotheby’s International Realty, said the decision to increase the benchmark interest rate by 0.5% to 5.5% has been expected.
“The South African economy is in a period of sluggish growth as it recovers from the recession and the Reserve Bank’s decision should signal confidence in the South African economy and encourage foreign investors to leave their money in the country," he said.
“The prospect of substantial increases in inflation necessitates a rate hike to avoid artificial pressure being put on consumers."
He said this is unlikely to have an immediate effect on the residential property market, which is currently in a slow boom period after a year of massive shortages of sale stock.
"It does signal a warning to buyers, though, not to purchase property at the upper limit of what they can afford, because interest rates are unlikely to remain this low in the medium term," he said.
"As long as they can anticipate a total of 3% rate increase over the next few years and can sustain the affordability, they will be OK.”
Disappointment
Seeff chairperson Samuel Seeff, has reacted with shock and disappointment to the announcement to increase the repo rate.
"For the first time in five years, we have seen more balance in the housing market with buoyant demand and increased sales volumes in the major metropolitan areas," he said.
"This hike is premature and is not related to the excessive demand in the market. It is unlikely to make a real difference other than to cool the economy and impact on the current positive sentiment in the housing market."
- Fin24
* Calculate your new monthly mortgage repayments with our bond calculator.
