The decision to keep the repo rate unchanged at 3.5% by The Reserve Bank, has been welcomed by the South African Property sector.
Dr Andrew Golding, chief executive of the Pam Golding Property group, said that the decision to hold rates was largely expected and is expected to benefit homeowners.
“This means that the prime lending rate remains steady at a near 50-year low of 7% with indications that it is unlikely to dip further, so for potential homeowners, it is a reminder that if you are thinking of buying a home, now would be a good time to secure an attractive interest rate.
Economists in the main argued that interest rates are currently at the correct level given the prevailing economic environment.
From a residential property perspective, last year’s aggressive rate cuts have fuelled home buying to a large degree, with 2020 surprising many by showing robust home-buying activity. In fact, according to FNB, 2020 registered the highest volume of mortgage approvals in South Africa in more than a decade.
“While the economy is expected to rebound this year, the robust growth rate forecast will largely be the result of comparisons to last year’s exceptionally weak levels,” Golding said.
Adrian Goslett, Regional Director and CEO of RE/Max of Southern Africa, says that this was a predictable outcome and, unless things take an unexcepted turn, he predicts that interest rates are likely to remain steady for the remainder of the year.
“Homeowners and first-time buyers continue to find themselves in a favourable position when it comes to the interest rate on their home loan. While a further cut would have helped the many South Africans who are struggling to make ends meet within the current economy, keeping rates at this historic low will at the very least make it easier for homeowners to keep up with the repayments on their home loan within this challenging economic climate,” says Goslett.
While it is unlikely that interest rates will climb this year, Goslett still advises homeowners to leave room in their budget for a possible increase of around 0.5 points during the course of 2021.
“The MPC has warned of two potential increases of 25 basis points in the second and fourth quarters of 2021, but this is all dependent on how the economy performs and many economists predict that an increase is not likely to be necessary. However unlikely it may or may not be, homeowners should just bear this in mind when budgeting for the year ahead,” he advises.
As a final word of advice, Goslett explains that activity within the property market has been at an all-time high following the series of interest rate cuts that occurred last year. “Our reported sales figures YTD February reflect a 33% growth on last year and our registered sales are up by 50%. Our partner, BetterBond, has also seen their home loan business grow in value by 46% over this period, underlining how low interest rates have made owning your dream home a reality for many more South Africans.
If activity continues at this rate, it won’t be long before we shift into a seller’s market where buyers will have to out-bid each other to secure the home. Before this shift occurs, I would recommend that buyers act fast and make the most of the current market conditions,” Goslett concludes.
Source: SA Commercial Property News http://www.sacommercialpropnews.co.za/south-africa-economy/9310-property-sector-welcomes-unchanged-rates.html