As we head into the new year, the local economy seems to be picking up ever so slightly. For many, then, the Reserve Bank’s decision to keep the repo rate unchanged at 6.75% was disappointing. We reached out to Samuel Seeff, chairman of the Seeff Property Group, to see what he has to think.
The recent decision to retain the repo rate is very disappointing for the economy and property market, Seeff. We enter the year on more positive note and with the improvements in the currency and stability of the CPI rate within the SARB target range, the time is right for a rate cut to stimulate the economy and property market.
Furthermore, the much awaited appointment of Cyril Ramaphosa as President of the ANC and President in waiting of SA has boosted consumer and business confidence and is sending a positive message to the market.
The announcement of an Inquiry into State Capture, the JSE performing above expectation, improvement in the currency, petrol price drop and this interest rate drop, all bode well for the year ahead.
According to recent media reports, economists are also expecting an improved economy, boosted by higher commodity prices and stronger global demand and rebounds in agriculture, mining and manufacturing. Finance Minister, Malusi Gigaba also recently hinted that economic growth of 2% is achievable if government takes needed policy decisions including fiscal consolidations and taking action insofar as SOEs such as Eskom and SAA are concerned.
FNB too, has signalled that it may be a better year ahead for property. The most recent FNB Property Barometer reported that against expectation, the national house price growth rate improved on a month-to-month basis throughout last year from a low of 1.5% year-on-year in December 2016 to 6.1% for December 2017. The overall growth rate for 2017 averaged at 3.7% and FNB expects it to be stronger in 2018 at around 5%.
It therefore follows that a rate cut would have provided an added boost for the economy and market.
The economic challenges notwithstanding, there will always be activity in the market as people need to buy and sell for a variety of reasons. The first few months of the year is usually more active and we would urge those looking to sell or buy to go ahead and do so. There is no need to wait, business continues.
Seeff says that the group is ready to tackle the year ahead. “Our agents will be working with their clients to ensure that they understand the market challenges and price their properties correctly to attract the right level of interest and a good price. As the market stands right now, conditions are favourable for buyers and it is a good time to buy”, concluded Seeff.