Unchanged repo rate welcomed – Seeff

The decision by the Monetary Policy Committee to keep the repo rate unchanged at 8.25% (prime and base home loan rate 11.75%), is a welcome reprieve for the economy and property market, said chairperson of the Seeff Property Group Samuel Seeff.

“It was the correct decision given that inflation has, against expectation, been coming down rapidly over the last three months to 5.4% in June and is now within the bank’s 3% to 6% target range. The rand-dollar rate has also strengthened,” said Seeff.

He added that consumers, homeowners, and buyers have had to absorb enough rate hikes now.

“The interest rate is already too high and has been stymieing economic growth and driving unemployment and higher debt levels. The higher interest rate has done more harm than good. The bank should now be looking at lowering the interest rate. Along with electricity and other hikes, the burden on consumers, homeowners, and buyers has been simply too high. The higher interest rate has also driven down property sales volumes even in the Cape market, which has been strong.

“The market is now challenging for sellers and first-time buyers. The upside though, is that we are now undoubtedly in a buyer’s market. The effect is that sellers will now really have to focus on pricing accurately to attract buyers.”

According to Seeff, for buyers, this could be one of the best times to buy with prices trading relatively flat while the banks are still lending, albeit that buyers must now budget for the higher interest rate.

Samuel concluded that it feels similar to the period before the 1994 elections and the 2008-Global Financial Crisis. Those who had bought prior in 1993 or 2006/ 7 with the perceived risk at the time, subsequently benefited greatly from good capital growth which followed.