The Monetary Policy Committee of the South African Reserve Bank’s decision to keep the repo rate as is (at the current level of 6.5% – a base home loan rate of 10%) was widely expected by the property market says the Seeff Property Group.
Given the current sluggish economy (and the pressure on the Consumer Price Index due to rising costs and some renewed volatility in the currency), it was expected of the Monetary Policy Committee to take a conservative stance. Seeff expects the interest rate to remain flat for the remainder of 2018.
According to the Seeff’s group CEO, Stuart Manning, the economy has not yet seen a notable uptick, although the overall sentiment is up, following the appointment of President Cyril Ramaphosa. January’s early surge has unfortunately been tempered by policy uncertainty around land expropriation.
“The recent announcement by the ANC’s National Executive Committee that it will first test this with the Constitution, as it stands, is therefore most welcome” said Manning. President Ramaphosa reiterated in parliament this week that it will be done in pursuance of economic growth and food security.
Further to this, Manning says: “that the Seeff group remains buoyed by the more positive outlook and if we can just get over a few hurdles, we could start seeing the economy take a real turn. Bear in mind, consumers have had to absorb a VAT hike along with petrol price and other increases“.
Encouragingly, he noted that the Gauteng markets are picking up and that, for the first time in many years, there has been a surge in transactions above R20 million in the top end of Johannesburg’s areas. “This” he adds, “is a good indication that confidence is returning to the market. These markets are also usually the first to feel a recovery“.
The Cape metro on the other hand, is now feeling the effects of the poor economy, drought and the dip in tourism and semigration which means that most areas are reporting tight trading conditions, especially at the upper end of the market.
The country’s micro-economic challenges notwithstanding, Manning says there are many positives for the market. The banks are granting more bonds, price growth is still fairly flat and that means that it is a great time to buy: “predicting the market is difficult, but indications are that the economy is poised for growth which will naturally boost the property market“.
The lower to mid-market price ranges to around R1.5 million to R2.5 million are quite active, but overall, Manning says that sellers need to price in the right range to catch the interest of buyers.”The message for buyers, is not to wait too long, otherwise they may just look back with regret“.
“We are seeing somewhat of a hybrid market right now with some areas performing well while others are still struggling” Manning concluded.