Today’s decision by the Monetary Policy Committee of the South
African Reserve Bank to keep the interest rate at the current level of 7%, with
home loan base rate of 10.5%, for the fifth successive meeting is most welcome
news, says Samuel Seeff, chairman of the Seeff Property Group.
“A rate cut would have been much better, but we will take any good news that we can get at this stage,” says Seeff. “We are seeing an overall property market increasingly feeling the pinch of the poor economic fundamentals and just too much negative political noise that is undermining business and consumer confidence.”While the currency has stabilised, the December inflation
rate climbed to 6.8%, up from 6.6% in November as it continues its stubborn
breach of the 6% upper target range. This, says Seeff, is concerning for
interest rate stability, the economy and further downward pressure on the
property market.
“Retail has not had a great festive season, new vehicle
sales are under pressure and there is some noise around more job losses on the
cards,” he says. “That said, we are encouraged by some economists who are
expecting an improvement in the economy this year.”
Seeff says some interesting developments to watch include
how the ‘Trump era’ will affect our economy and the performance of emerging
markets, especially the Chinese economy, now South Africa’s biggest trade
partner. “Commodity prices and demand along with the drought and recent
devastating fires in the Western Cape are all concerns that weigh on the
economy and property market. The lead up to the ANC’s elective conference in
December is also likely to impact.”
Despite some rather negative data from the property
economists, we continue seeing a reasonably resilient market, obviously slower,
especially in the economically affected areas such as the northern region
mining towns, countryside and some coastal belts, but on the whole, it remains
business as usual, he says.
Seeff says regardless of the economic state, there is
always a level of activity and the market is still in a much better position
compared to the post 2007/8 period. “Although stock levels have increased and
price growth has slowed, we have not seen prices drop nor any major creep in
bond defaulters, the movements have been manageable on the whole.”
This, is no doubt going to be a year of further
consolidation for the property market and Seeff says that Budget 2017 is likely
to bring further cost rises. Nonetheless, he adds, there is still plenty of
positivity in the market with opportunities for buyers, sellers and investors
in almost every sector.
Seeff cautions though that prudence is the order of the day
and says it is advisable to speak to your local property specialist for insight
on local conditions as these vary drastically from area to area and regionally.
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