Repo rate cut by 25 basis points a relief for owners and buyers
Category General
“Consumers could use some positive news right now, and this downward shift, albeit only a quarter of a percent, is important as it sends a positive signal to the market and hopefully heralds the start of a downward shift in the interest rate cycle. It will also impact favourably on market sentiment, and therefore activity in general.”
“With inflation seemingly under control and the rand looking stronger, and against a backdrop of a sluggish economy, what South Africa needs is a stimulus for economic growth and investment.”
The cut brings the repo rate down to 6.75% (home loan base rate of 10.25%), and will be a welcome saving for homeowners, and will certainly boost the property market.
“The lack of action and economic and political will is disappointing in view of the continued business confidence and economic decline,”
There is still plenty of activity to keep the property market ticking over, and it is still in a better position than post-2007/8, the market is shifting on the back of the poor political and economic outlook.
Despite the economic and socio-political challenges faced both locally and globally, South Africa’s residential property market remains notable for its ongoing resilience and appetite for property investment.
“In a sense one could say that it’s business as usual for the many citizens who are getting on with their lives and transacting in home acquisitions and sales for all the usual reasons.”T
The cut brings the repo rate down to 6.75% (home loan base rate of 10.25%), and will be a welcome saving for homeowners, and will certainly boost the property market.
“These include buying that first home, upgrading or downsizing according to changing lifestyle requirements, relocating for career moves or a desire for a different residential destination or region, buying a leisure home or a place to retire to, or acquiring property purely as an investment - including steady rental income generation.”
“On the upside, the banks are still keen to lend, and today’s rate decision is good news in that regard. However, the banks are taking a more conservative approach to approvals and deposit requirements are on the rise,”
There are two main segments that currently form the backbone of market demand - first-time buyers and those seeking sectional title properties.
“Top-performing sectors at present include the lower-priced band under R1 million and the smaller two bedroom sectional title market - both of which reflect the consistently strong demand from first time buyers. Over and above this, steady activity continues in the middle and luxury segments of the market”..
South African demographics are strongly positive for the housing market.
“The local population is young, with approximately two thirds of residents under the age of the typical first-time buyer (34 years) and hence not yet in the housing market. This will ensure continued strong demand from this burgeoning section of the market, particularly as a new generation of savvy young professionals reflect a growing aspiration to gain a foothold on the property ladder by investing in home ownership,”
Author: Property24
