Those who interpreted his recent remarks in the press to the effect that further interest rate rises appear to be inevitable as support for such moves are way off the mark, says Tony Clarke, MD of Rawson Properties.
'I believe that the last rise was put through prematurely, i.e. before the previous rise had time to take effect,' said Clarke. 'Our experience in property marketing has been that interest rate rises take half a year to exert their full influence - and I am told that it is much the same in other sectors.
'When the rate hit 14% it was evident that this would very definitely have a braking effect on sales and the economy in general - but not instantaneously. The further rise is therefore almost certainly an overkill and one which has been implemented prematurely'
Clarke said that he and others in property selling are now concerned that further rises this year will shackle the economy and hit the house market hard.
'Many of South Africas economists have recently pointed out that rising inflation, which the government is so desperately trying to curb, reflects the current oil and food prices and the exchange rate situation rather than excessive spending by the man-in-the-street. In our view, it is therefore counterproductive to rein in consumer spending (and job creation) as a means of controlling the effects of factors over which the consumer has no control. Perhaps we should just accept the 7% or 8% inflation rate. We need, after all, to support our growing economy."
Clarke said that the higher interest rates would be most acutely felt in the lower sectors of the market where buyers are usually 90% or 100% bonded and where they struggle to meet their payments.
This, he said, could lead to the large pool of potential buyers here once again opting to rent and thereby missing out on the wealth creation and consequent stability that property ownership imparts.
'This would be a great pity and I believe the government should take steps to avoid this happening,' said Clarke.
