While it is true that property developers and property marketers would have welcomed a further drop in the repo rates when the South African Reserve Bank’s Monetary Policy Committee met on Thursday 20th September – which did not materialize – it is also true that keeping the rate at 5% is helping to stabilize the market after its slight uptick following the July 0, 5% drop.
“The new stability of the market is, I believe, beginning to have beneficial effects,” says Bill Rawson, Chairman of the Rawson Property Group.
His group’s franchisees, said Rawson, are starting to repeat that the market is now slowly moving away from the 2008 to 2011 conditions, which were very much to the buyer’s advantage, and, he said, this shift is being aided by the marked reduction in the number of people forced to sell their homes and in the number of distressed properties and sale in execution sales.
“What we are seeing now,” he said, “is a slightly more stable scenario in which people are holding onto their properties. I expect this to impact on house prices over the coming year.”
The current nominal price growth, which ABSA recently reported to be 1,1% for middle bracket homes, 0,8% for upper bracket homes and minus some 10% for low cost housing, is, said Rawson, still ensuring that house prices are not keeping up with the current inflation rate - and this is not a satisfactory situation.
“A further 0, 5% drop in the repo rate would have boosted the market slightly, but the Monetary Policy Committee’s caution is completely understandable,” said Rawson, “in view of the facts that the Eurozone and the USA still have two to three years of troubled times ahead of them and that the Chinese growth rate has slowed down by some 3% this year.”
“The question which I am most commonly asked in these circumstances,” said Rawson, “is, ‘Is this a good time to buy property?’ The answer is that I think we can almost guarantee that, although price increases will be slow, they will be evident from here on and, as always, I am one of those in favour of buying now if you can get the finance to do so.”
