THE RESERVE Bank's decision to hold the repo rate at 5.5 percent - where it has been for 18 months - is good news, says Bill Rawson, chairman of Rawson Properties. "This has been the longest-running low rate scenario in South Africa since the 1930s and it has done a great deal to foster confidence in residential property," he says.
"What is more, with Europe in financial turmoil and the UK now facing a double-dip recession, the repo rate will probably stay at low levels for the foreseeable future.
"The inflation rate is driven by high oil and food prices, and some predicted it would reach 6.8 percent this quarter, but to everyone's surprise inflation is currently at 6.1 percent, and it seems unlikely to go much higher. This bodes will for a continuing low interest rate."
He says prospects for buyers have improved steadily. "Property sales are still 50 percent below the levels of 2006 but we are seeing a steady improvement in sales data and a slow but discernible increase in average prices."
Rawson says house prices are at the bottom of the cycle and that this is the right time to buy. "FNB reports that a 6 percent year-on-year rise in house prices is taking place and the long-awaited bottoming out has probably come about. Those who don't buy before the end of this year could find they are hit by rising prices.
"However, the get-rich-quick days in property experienced in the 2003 to 2008 era will not be seen again."
Adrian Goslett, Chief executive of RE/MAX of Southern Africa, believes the decision to keep the interest rate steady will continue to boost the property market.
"So far, the low and steady interest rate has brought many more buyers back into the property sector during the first quarter of 2012," he says.
No comments:
Post a Comment