The South African Reserve Bank Cuts Interest Rate for the First Time Since The Pandemic
Category News
For the first time in four years, the South African Reserve Bank (SARB) has finally decided to cut the repo rate. This change has been welcomed by the broader property market, which has been suppressed for some time as the result of both high interest rates and other macroeconomic issues.
However, the SARB's decision to cut the repo rate by only 25 basis points left many scratching their heads and hoping that this would be the first of many further cuts to come.
Samuel Seeff, Chairman of the Seeff Property Group had this to say on the announcement, "We would have liked to have seen a 50 basis point cut, but we are happy to take 25 basis points, and hope that this is the first of more rate cuts to follow. Especially, given that the US Fed cut its rate by 50 basis points and has plans for two further rate cuts of 25 basis points each."
This cut will likely have a largely positive effect on consumer sentiment now, but it will likely take some time before this starts to have a bearing on buyer decision making further down the liine once the market adjusts to the lower interest rates.
However, if you're in the market for property, it might be better not to wait for others to act.
"While no one ever rings a bell to tell you that the market has bottomed out and it is time to buy property, we certainly believe that we are potentially in one of the best markets for property buyers. Price growth has been particularly weak over the last two years, especially in markets such as Gauteng and KZN and other inland areas.
"Buyers are, therefore, able to find good value, and they should take advantage before the market takes off again. Buying now just before the market takes off again means you can find property at similar prices to what they were two years ago and can potentially benefit from capital appreciation as property values tick up again."
Currently, all signs are pointing to a big comeback in the property market, as our electricity supply has been stable for the last six months, our GNU is now firmly in place and has instilled confidence in investors both local and international, and the petrol price has come down significantly.
The only thing holding the market back from a significant boom is further interest rate cuts, which we can likely expect in the coming months.
Author: Seeff Atlantic Seaboard & City Bowl
