The decision taken on Thursday the 20th of November by the South African Reserve Bank (SARB) Monetary Policy Committee to keep the interest rates at their current level is unlikely seriously to boost consumer confidence or buying power. Nevertheless, it is still clear that the SARB are concerned about the lack of austerity measures adopted by the South African consumer and it is more than possible that in the not too distant future rises in the interest rate will be put through. South African consumers are therefore advised to resist any attempt to overspend and to continue to focus on saving measures.
This was said recently by Bill Rawson, Chairman of the Rawson Property Group, one of the top four national estate agencies in South Africa today.
“Consumer price inflation fell to 5,9% in September after hitting 6,4% in August,” said Rawson, “but this is only just within the 6% target bracket.”
“The drop was largely due to the unexpected decrease in the oil price (some had speculated at one stage that it could go the other way and hit US $400) and has helped significantly to keep inflation below the 6% upper target level. It is now predicted that average inflation for this year will be 6,1% — dropping in 2015 to 5,2% or even close to 5% provided that the rand/dollar exchange rate remains favourable.”
“This is by no means a foregone conclusion,” said Rawson, “but we can almost certainly look forward to no further interest rate rises until early next year followed by only a 0,5% to 1% rise for the duration of 2015.”
The latest (7th of November) Absa Home Loans report, said Rawson, has shown that price growth in middle segment housing is now showing signs of a slowdown and is likely to remain significantly below 10% throughout 2015 although continuing to be above 7% or thereabouts. Small and large category homes, by contrast, will probably show better price growth in the year ahead.
“The extraordinary thing is that although such general average price growth levels are hardly spectacular, there are today many large pockets in the suburban residential precincts of the major South African cities and in a few places elsewhere where stock shortages are being experienced and price rises year-on-year are into double digit figures and will probably continue to perform at these satisfactory levels. That being the case, potential buyers in these areas should continue to save and make every possible sacrifice in order to become home owners knowing well that whatever residential property they buy today at a market related price will almost certainly appreciate in a very healthy fashion for the next few years.”
For further information contact the Rawson Property Group on (021) 658 7100.
