Seeff Chairman, Samuel Seeff, has welcomed the recent decision by the Reserve Bankâ€™s Monetary Policy Committee to retain the repo rate at 5,75% (base home loan rate of 9,25%).
â€œWhile not unexpected in light of the recent announcement that the inflation rate hit a low of 3,9% (down from 4,4% in January and around 6% late last year), the decision is nonetheless welcome in light of the current economic challenges,â€ Seeff was quoted to have said.
An interest rate hike right now would have been very difficult given that the economy is facing pressure, not least of which the current electricity crisis.
â€œWhile we are aware that the interest rate is artificially low and that an adjustment is needed in light of the necessity for fiscal consolidation, the current economic state simply does not warrant a hike despite the pressure on the Rand.â€
Consumers and home owners are already having to absorb basic cost hikes including an almost 13% increase in the electricity tariff, higher petrol costs and higher personal income tax for top earners.
Seeff added that this has a direct bearing on the demand for housing. â€œGiven that we are in the midst of a much needed growth spurt, we therefore welcome the stability of an unchanged interest rate. The economy, while still flat and the energy crisis notwithstanding, is also relatively stable, all of which supports the continued good demand in the market,â€ he said.
Looking further ahead, we know that an interest rate hike is still a looming possibility and consumers, home owners and buyers need to bear this in mind. Careful budgeting and financial prudence – buying below your means and investing a deposit – remain vital and will also help keep balance in the housing market in the long term.
On the whole, Seeff expects the market to maintain the good momentum, at least for the first half of the year, especially in view of the flat interest rate. Buyers are still seeing the market as offering good value and there is still plenty of pent up demand. This, combined with the still tight property inventory levels, will keep the momentum going.