“The hawkish stance of the Monetary Policy Committee at preceding meetings gave a clear indication that a hike in the repo rate was most likely imminent, as borne out by the announcement today (23 July 2015) of a 25 basis point increase, “ said Dr Andrew Golding, chief executive of the Pam Golding Property Group.
However, this does little to soften the economic blow for cash-strapped consumers, particularly those in lower income groups with high mortgages and monthly repayments exerting pressure on already over-burdened budgets which have to contend with a basket of rising costs such as municipal rates, electricity tariffs, fuel and food, among others.
Recent market commentary, in general, provides a less optimistic economic outlook – with consumer confidence at a low level, manufacturing and mining production down, concerns around job security, and load-shedding coupled with Eskom’s proposals to further increase electricity tariffs weighing further on South Africa’s weak economy.[clickToTweet tweet=”The hawkish stance of the MPC at preceding meetings gave a clear indication that a rate hike was likely imminent.” quote=”The hawkish stance of the MPC at preceding meetings gave a clear indication that a rate hike was likely imminent.”] Historically resilient, demonstrating the ability to bounce back following down-cycles and dips in the economy, the residential property sector is currently experiencing a marginal slow-down in activity.
“Apart from the fact that the winter months tend to be somewhat quieter transactional periods, the pressure of rising costs leading to reduced affordability as well as dampened economic sentiment are factors impacting on concluded sales. While the appetite for property acquisitions remains strong, some consumers are displaying an understandable tendency towards moderation rather than over-committing financially.”
Cash is king
Dr Golding says despite these factors, Pam Golding Properties continues to see healthy capital growth in residential property values in major metropolitan areas and high-demand nodes around the country, with stock shortages prevalent and also limiting sales. Cash is proving king in sought after areas where high-demand properties are attracting multiple offers.
Current trends evident in the marketplace include an ever-increasing desire for convenience of location within easy reach of the workplace and/or schooling, secure living and lower maintenance costs. As a result, sectional title apartments in commercial centres and homes within accessible security estates are the first choice for many home buyers.
“Positively, we are also noticing a trend towards expatriates returning to our shores and acquiring homes for permanent relocation back home or for use during extended periods of the year.”
“It is hoped that the interest rate will now remain steady for the rest of 2015, providing stability and incentive for aspirant home buyers who realise the investment potential of property.”
This article “Repo Rate Increase A Dampener For Home Buyers “ was issued by Pam Golding Property SA.