Today the Monetary Policy Committee kept the repo rate (6.5%) stable, with prime remaining at 10%.
Here’s what market commentators had to say.
Andrew Golding, CE of Pam Golding Property group
“…growth prospects for the housing market are definitely improving, so there is some upside on the horizon, but what we need now from the Reserve Bank is a steady hand in regard to the repo rate. Currently, and in regard to Pam Golding Properties’ sales, the residential property market is stable, with the strongest demand in the lower to middle market segments to around R5m, with credit lending a positive contributor to market activity.
“While activity in the very top end of the market is moderate, buyers in the R5m to R10m price band continue to transact in sought-after locations. The common denominator in today’s market is undoubtedly realistic pricing, as buyers generally are price-aware, seeking sound value for money. As a result, over-priced stock will sit on the market.”
“The early January [political sentiment] surge has unfortunately been somewhat tempered by policy uncertainty around land expropriation. The recent announcement by the ANC’s NEC that it will first test this with the Constitution‚ as it stands, is therefore most welcome. President Ramaphosa also again reiterated in parliament this week that it will be done in pursuance of economic growth and food security.
“…the Seeff group remains buoyed by the more positive outlook and if we can just get over a few hurdles, we could start seeing the economy take a real turn. The Gauteng markets are picking up and that, for the first time in many years, there has been a surge in transactions above R20m in the top end Johannesburg areas. This is a good indication that confidence is returning to the market. These markets are also usually the first to feel a recovery.”
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa
“According to [Reserve Bank Governor Lesetja] Kganyago, the rand is currently 6% weaker against the dollar than what it was at the last MPC meeting. Pair this with the ever-rising fuel and oil prices, likely changes in global monetary policies and the likelihood for increased inflation rates and it becomes easy to understand why the MPC chose to keep lending rates where they are.
“During the announcement in March, the MPC noted that the VAT increase would add about 0.6 percentage points to the headline inflation trajectory over the year that followed. Keeping the interest rate where it is therefore allows things to stabilise while the economy adjusts to the newly raised cost of living. Kganyago also announced at the meeting that the MPC will keep a close eye on the economic outlook to keep inflation rates within the 3% to 6% target range set by the South African Reserve Bank. As a result, they predict that an increase by 25 basis points is likely to occur, but only in the final quarter of this year.
“Homeowners should not be disappointed with this decision, but should rather see it as one less thing to reorganise their budget around. Unchanged interest rates mean at the very least that homeowners do not need to find extra money to make their monthly repayments.”