Estate agents disappointed by lack of rate cut, but say property is on festive shopping lists

Estate agents have expressed disappointed at the Reserve Bank’s decision to leave interest rates unchanged for the second time since Covid-19.

The bank’s Monetary Policy Committee (MPC) has kept the repo rate unchanged at 3.5%, the prime lending rate remains unchanged at 7%.

According to the bank’s Quarterly Projection Model data, there will be no further repo rate cuts in the near term. The bank says two rate increases of 25 basis points each can be expected in the third and fourth quarters of 2021.

South Africans have become accustomed to rate cuts since the beginning of 2020, easing financial burden for many.

Read also: SARB cuts interest rates by another 100bps in wake of Covid-19

Historic low interest rates have opened wide the real estate flood gates with new entrants buying property in different price brackets.

It’s not just first-time buyers, but other buyers too upgrading to bigger properties or affluent suburbs, according to estate agents.

Read also: Low interest rates, falling prices send home buyers to affluent suburbs

Although disappointed but the MPC decision, estate agents say buying property this festive season remains on the shopping list.

“The MPC decision to retain the repo rate at 3.5% is disappointing and out of step with the economy.” Samuel Seeff, chairman of the Seeff Property Group echoed his disappointment following the MPC’s announcement on interest rates on Thursday.

According to Seeff, a third quarter economic bounce-back is unlikely to result in a net growth position. Overall, the outlook remains negative as confirmed by Moody’s and Fitch.

Combined with inflation rate at just 3%, there was a strong enough case for at least a further 25bps rate cut.

“A rate cut would have provided a vital business and consumer boost ahead of the busy retail and holiday season.”

He says a well-balanced market coupled with attractive pricing means South Africans will be shopping for properties this festive season.

Countrywide, estate agents point to low interest rates as the driving force behind improved sales activity in the residential market.

Read also: Can low interest rates, falling house prices sustain residential property buying activity?

Seeff says the property market is one sector which has shown the vital importance of appropriate rate cuts.

“We have experienced some of the best trading months in six years. In some instances, better than at the height of the last 2015/6 mini property boom.”

Current market activity is driven predominantly by buyers with stable employment and favourable mortgage lending conditions. Many buyers are now investing in second homes and rental properties where they find good value, says Seeff.

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