Samuel Seeff, Chairman of the Seeff Property Group.
Today’s interest rate hike is exactly as expected. It is the third successive hike and, as we all know by now, interest rates are set to continue climbing this year as we are amidst one of the toughest economic cycles in the country’s history.
That is the reaction from Samuel Seeff, chairman of the Seeff property group following the announcement by the Reserve Bank’s Monetary Policy Committee (MPC) to hike the repo rate by 25 basis points, taking it to 7% and the base home loan rate to 10.5%.
A tough economy with poor growth and rising costs and interest rates is the general theme for this year, says Seeff. The economic landscape is further dominated by a potential downgrade of the country’s sovereign credit rating to junk status, something that will have a profound impact on the economy and property market.
The rising rates and costs are impacting housing affordability, especially for the bulk of buyers who require mortgage bonds. That consumers and home buyers will find the going tough this year is unavoidable, but Seeff says that we should not get too drawn by the negativity.
The economic challenges and headwinds notwithstanding, we are still seeing a resilient market. It is slowing, that it inevitable, but says Seeff, there is no disaster in sight and no need for buyers and sellers to panic.
“Our agents have for some time been preparing our clients – sellers and buyers alike – that they need to factor rising interest rates, a slowing in demand and general economic decline into their home selling and buying decisions”.
“That means that buyers need to budget carefully and buy well within their means and factor in additional rate and cost hikes. On the flip side, sellers need to be mindful that prices are under pressure and the time for high price expectations has come to an end”.
“On the whole, we are still seeing a property market that is holding up well. Seeff’s turnover for February for example was just under R1.2bn, very similar to last year’s figures. Ooba too reported a record month in terms of bond applications and we remain confident about the market for this year”.
Looking forward, Seeff says that he expects that the market will absorb the rate hike and, after the initial impact, adjust to the economic challenges. There is no doubt that the mini-boom is now over, but it will remain business as usual.
“Remember, we are still sitting with an interest rate that is below the average of around 13%-14% of the 2000-2007/8 period. In the late 1980s to late 1990s, the rate was around the 18%-25.5% range and there was a still activity in the market”.
“That notwithstanding, we add our voice to other business leaders and economists and call for decisive action to get our economy back on track, at least insofar as what we can control is concerned”.