Reserve Bank Governor, Lesetja Kganyago, said that the Monetary Policy Committee had once again decided to let the interest rates remain unchanged with the repo rate at 6.75%, and the prime lending rate at 10.25%.
A number of prominent property industry leaders commented on the MPC’s decision not to cut rates, and how they think this might impact residential property.
Homeowners and potential future buyers should focus on curbing unnecessary spending and starting a savings plan of some kind. Often during low-interest rate cycles, consumers are tempted to take on high-risk investment or debt and are discouraged from saving. However, where possible consumers should use this time to create a financial contingency plan
– Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa
Even with the weakening of the Rand and the fuel price increases over the last few months, the latest inflation data was surprisingly good, however, too much uncertainty remains in the current environment. Our financial and economic woes are self-inflicted and until this changes, the uncertainty will remain and the Reserve Bank will have to take a very cautious view on interest rates. The impact on the market will be negligible as no one really believed we would get a rate cut. The key factor in the current residential market is consumer confidence and not interest rates. When consumers start to feel more positive about the long-term future of the country, they will buy properties. Right now many ‘would be’ buyers are adopting a wait and see approach. The elective conference in December is going to be the next big milestone for the country and consumer confidence. The irony is that with property price growth at its lowest rate in years – even in the Western Cape – now has never been a better time to buy.
– Herschel Jawitz, CEO of Jawitz Properties
This decision underscores the challenges faced by the economy which directly impacts the property market. Inflation and the volatility of the currency remain a concern and there is also the impending threat of further credit downgrades.
Although the property market has shifted and we are entering 2018 with a buyer’s market for most areas, regardless of the state of the economy, there is opportunity in every market.
– Samuel Seeff, chairman of the Seeff Property Group
Given the poor economic growth and the fact that inflation is expected to remain within the targeted band for the remainder of the year, some economists predict that we could see another cut in the rates shortly.
Overall, Finance Minister, Malusi Gigaba’s recent mini budget to Parliament painted a subdued outlook for 2018 and, and it is likely to be a challenging year for the economy and property market. Home owners, buyers and consumers will have to be astute with their finances and belt tightening will be the order of the day.