Samuel Seeff,
Seeff Property Group chairman
Time to buy property, says Samuel Seeff, the Seeff Property Group chairman. This, as today’s 25bps interest rate cut by the Reserve Bank, brings welcome relief for consumers and property buyers. The rate cut takes the repo rate to 8%, which means the base home loan rate should be reduced to 11.5%.
He says, “We would have liked to have seen a 50bps cut, but we are happy to take 25bps, and hope this is the first of more rate cuts to follow.” This is especially true given that the US Fed cut its rate by 50bps and plans two further rate cuts of 25bps each. This follows recent cuts by the Bank of England and two cuts by the European Central Bank.
The rate cut has been hotly anticipated by the property market, given the improved economic indicators. This week, we heard that the CPI has declined further to 4.4%, which is now within the bank’s target range.
The Rand has strengthened and dipped below R17.50 to the US dollar this morning from a high of R19.2 in late April. The falling oil price and pending petrol price cut should further relieve consumers.
Seeff says the economy and property market are set to grow, but both need more interest rate relief. We are seeing the positive effects of the Government of National Unity (GNU) starting to bear fruit. The energy grid has also been stable for close to six months, which is a huge boost for the economy.
There is a lot of pent-up demand in the market, with estate agents, sellers, and buyers all eagerly anticipating that this cut will have a positive impact. In addition to the petrol savings and lower inflation, the rate cut will add money back into the pockets of consumers to spend in the economy and improve the affordability of homes.
Best of all, while no one ever rings a bell to tell you that the market has bottomed out and it is time to buy property, we certainly believe that we are potentially in one of the best markets for property buyers. Price growth has been particularly weak over the last two years, especially in markets such as Gauteng, KZN, and other inland areas.
Buyers are, therefore, able to find good value, and they should take advantage before the market takes off again. Buying now, just before the market takes off again, means you can find property at prices similar to what they were two years ago and can potentially then benefit from capital appreciation as property values tick up again.
More buyers in the market is also good news for sellers. Agents anticipate an increase in offers, especially as we move into the warmer months. He adds that once competition and momentum in the market increase, prices should start ticking up.
A healthy and growing property market is not only good for getting more people into their own homes but also a vital economic contributor and economic multiplier. Aside from transfer duty tax for the government, agency commission, and attorneys’ fees, there is an entire value chain that benefits, from movers, builders and renovators to decorators and so on. It is also a catalyst for further infrastructure development and growth, including housing.
As a result of the 25bps rate cut, mortgage repayments will reduce as follows:
R750 000 bond – from R8 128 to R7 998 – thus saving R130
R900 000 bond – from R9 753 to R9 598 – thus saving R155
R1 000 000 bond – from R10 837 to R10 664 – thus saving R173
R1 500 000 bond – from R16 256 to R15 996 – thus saving R260
R2 000 000 bond – from R21 674 to R21 329 – thus saving R345
R2 500 000 bond – from R27 093 to R26 661 – thus saving R432