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Homeowners and would-be buyers can breathe a sigh of relief as the South African Reserve Bank (SARB) is widely expected to cut interest rates today.
The SARB’s Monetary Policy Committee (MPC) is set to cut interest rates by 25 basis points, taking the repo rate down from its 15-year high of 8.25%.
The decision follows an improvement in the inflation outlook. Headline inflation dropped to 4.4% in August, which is below the SARB’s target of 4.5%.
With the rand also performing slightly better against the dollar, and foreign investors throwing money into South African bonds, it seems our too-long winter of discontent might be moving into spring.
WATCH LIVE: Governor Lesetja Kganyago will deliver the MPC statement today at 15:00. The press conference will be live-streamed on Facebook https://t.co/jkqyCWw0wv & YouTube https://t.co/8Ztcngcgvx. Alternatively, watch on local news channels. Use #SARBMPCSEP24 pic.twitter.com/sCSNsFOroU
— SA Reserve Bank (@SAReserveBank) September 19, 2024
One of the more optimistic voices is that of John Herbst, CEO of Fine & Country Sub-Sahara Africa (SSA), who believes that interest rate cuts will likely invigorate the property market, especially in inland metros.
“As interest rates drop, we expect a surge in market activity, which could lead to a boost in property values. This is welcome news for homeowners and investors alike, particularly after subdued growth.”
As an interesting side note, the Lightstone Property Group recently revealed in Property Professionals that more than a quarter of people selling property at the moment end up buying a new property in a different province.
As expected, the Western Cape is seeing the most of the buying part of the trend. In 2023, 50,000 homeowners participated in the sell-to-buy market. Gauteng and the Western Cape dominated, accounting for 48% and 23% of transactions, totalling just over 70% of the market. The remaining seven provinces made up the balance.
Buyers who choose to stay in the same province fell by 10% in Gauteng, 9% in the Eastern Cape and Free State, 13% in KwaZulu-Natal and Mpumalanga, and 15% in Limpopo.
The Western Cape gets more than 65% of transactions in the R2m-R3m price band, more than 70% in the R3m-R4m and R4m-R5m price bands, and around 85% of properties above R5m in value. In fact, 70% of those moving to the Western Cape end up in higher-value properties.
And a cut to interest rates is going to certainly boost the local property market. Hooray for us (we think). This could also result in a potential lift in average home prices.
“While the market has faced challenges in recent months, including inflationary pressures and external factors, the likely reduction in interest rates is set to create a more favourable environment for buyers and sellers.”
“We believe this will benefit the residential market, especially in the premium sector, where recovery has been eagerly awaited.”
Samuel Seeff, chairman of the Seeff Property Group, reckons it’s about time, saying that the higher-than-necessary rate is hampering economic and property growth.
“It is almost unthinkable that the SARB would remain tone deaf to the plight of the economy and consumers.”
If you haven’t staked your claim in the Western Cape property market by now, and if you have the money honey, now is the time.
[source:propertyprofessionals&businesstech]
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