As expected, Bill Rawson, Chairman of Rawson Properties, has joined other residential marketing and development leaders in welcoming the South African Reserve Banks decision to hold the repo rate at 5,5% - effectively keeping the bank interest rate to customers at 9%.
'The decision,' said Rawson, 'will give confidence to many buyers, especially those at the lower end of the market, who have been reluctant to go house-hunting, and have often decided to delay the decision on this matter and wait for better times. Countrywide at Rawson Properties we have several hundred potential buyers in this category'
The decision, he said, was, in his view, by no means a foregone conclusion because it is now clear that big increases in fuel, electricity, food and wages (some slightly offset recently) will by the first quarter of 2012 push inflation over the 6% upper limit set by the South African Reserve Bank.
'Any increase in the interest rate at this stage would, I believe, have had a profoundly negative effect on our economy, which, as the Board of Executors economist Madalet Sessions has said, is not yet strong enough for such an increase. All in all, South Africa is still handling its finances responsibly (for which we can all be grateful) and expect the South African Reserve Bank to limit any interest rate increases this year to 1%. This should breathe life into the residential market which is still struggling to recover and in which many of the potential buyers are nervous about future interest rate rises. In our own group we are, in fact, expecting a significant rise in sales this year coming on top of the steady growth of the last two years'
Commenting on the South African Reserve Bank Governor Gill Marcus statement that the inevitable upswing in inflation will be mainly due to factors beyond South Africas control, Rawson said that the exception here are the wage increases, more of which seem inevitable in the next June/July round of wage negotiations.
Rawson said the small minority (nor more than three million) of employed workers represented by trade unions are holding the country to ransom, making it uncompetitive and preventing employers from offering workers jobs at low wages they would be only too happy to accept.
'There has to be a correlation between productivity and wages. This appears to be almost entirely forgotten, especially in the big state corporations, where, according to a report that I recently read, the output per individual is about one-third that of the Chinese in similar positions. As John Kane-Berman of the South African Bureau of Race Relations has pointed out, the widespread belief among the less educated classes that South African business has almost '˜bottomless pockets to finance ongoing wage increases and capital outlays is very dangerous for the country. Regrettably the government has not had the strength or the courage to limit these as is being done in all the European countries - Ireland, Spain, Portugal, Greece, Bulgaria and elsewhere - which are undergoing economic problems'
For further information contact Bill Rawson on 021 658 7100 or email bill@rawsonproperties.com.
