Sarb rate decision timeous boost for home owners | Fin24
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Sarb rate decision timeous boost for home owners

Sep 23 2016 06:00
Carin Smith

Cape Town - The decision by the monetary policy committee (MPC) of the SA Reserve Bank (Sarb) to keep the repo rate unchanged sends a positive message to home buyers and the residential property market in general, according to Dr Andrew Golding, chief executive of the Pam Golding Property group.

In his view, South Africa’s housing market continues to demonstrate maturity and ongoing resilience.

The repo rate stays at 7% and the base home loan rate at 10.5%.

“Following the recent successful elections, this is a further confidence boost for our economy and for those with existing mortgages or seeking finance for residential property acquisitions,” Golding said on Thursday.

This is despite the fact that overall the residential property market in South Africa has experienced a slight slowing in activity since early 2015.

“We are optimistic regarding the outlook for the rest of 2016 as the market remains generally resilient especially in the Western Cape and other coastal areas such as the Garden Route as well as in other select markets such as Pretoria and the KwaZulu-Natal North Coast,” said Golding.

“Apart from properties below R1m which are generally where most of the domestic market is active, properties between R1m and R3.5m remain the most sought after. In particular, sectional title apartments and security estates are in high demand as well as newly released developments in good locations hat are well priced for both owner-occupiers and investors.”

Seeff property group chair Samuel Seeff said the MPC decision to leave the repo rate unchanged is most welcome in a climate where the economic and housing market outlook remains weak.

"Save for any major dilemma, it also now seems likely that we will see the year out without any further interest rate hikes," he added.

This is now the third successive meeting that the rate has stayed put and Seeff said this breather is good news for home owners, who can now benefit from a rate saving a little longer. The flat rate, combined with the slower price growth, also makes for positive buying conditions.

"We do not foresee anything in the short term that will bring prices down any further, so, it is indeed a good time to buy. The banks are still lending and there is still time for buyers to get onto the property ladder, but caution is now the order of the day," said Seeff.

He added that it is still very much a tale of two cities - Cape Town versus the rest of the metros - but Seeff says that the market is still well balanced in most urban areas.

"While we do not expect any fireworks for the remainder of this year, there is still plenty of activity," said Seeff. "The South African property market has a history of resilience and that is in part still evident. Even just a slight economic uptick will be good news for the market."

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, said Sarb’s hiking cycle has hopefully come to an end for the time being, and consumers can use this window to sort out their financial affairs.

He pointed out that over the last few years the prime lending rate has increased by 2%, which has had a marked impact on homeowners and prospective buyers seeking to get into the door. A homeowner who purchased a property for R1m at the end of 2014 with a bond linked to prime, will currently be paying R1 306 more for the home.  

According to FNB household and property sector strategist John Loos, from the end of 2013 up until June this year the cumulative increase in the bond instalment on the average-priced home has increased by 42.1%.
According to Goslett, the MPC’s decision to keep the rates unchanged is the right move for both the property market and the greater economy.

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sarb  |  mpc  |  property  |  interest rates  |  sa economy


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