Holding the repo rate steady at today’s Monetary Policy Committee meeting today (24 November 2016) was the right decision and one which is expected to help boost consumer confidence at a time of the year when many are planning and making career and lifestyle decisions for the year ahead, says Dr Andrew Golding, CE of the Pam Golding Property group.
“Maintaining a stable repo rate not only sends a positive signal to South Africa’s housing market at this opportune time of year, it reaffirms ongoing investor confidence in the residential property market, which continues to experience a groundswell of demand among a new generation of young or first time home buyers.”
Dr Golding says subdued economic growth translates into limited employment creation, which in turn restricts the number of first time buyers able to enter the property market. South Africa has a potential demographic dividend with a large number of young people approaching the average age of first time buyers (approximately 34 years according to ooba), but they need jobs in order to be able to gain a foothold on the property ladder. A young population is a positive fundamental for a property market, fuelling a source of housing demand for a sustained period of time.
“While inflationary factors remain a concern, it is hoped that 2017 will herald modestly stronger economic growth, which will in turn have the effect of being slightly more supportive for the housing market. Much depends on the performance of the rand, but on balance, and taking into account recent comments by economic analysts, it is hoped that inflation may return to the inflation target range and that interest rates will not rise further, with the market even starting to look to the first cut in interest rates.
“As household finances have been under pressure for a sustained period of time, inflation easing and no further interest rate hikes would help alleviate financial stress to ensure it does not impact negatively on both aspirant buyers and sellers.”
He says despite the economic and socio-political headwinds faced, South Africa is seeing significant private investment in various growth nodes across the country, including mixed-use developments in metro CBDs – emphasising the continued shift to ‘live, work, play’ as costs of home ownership and growing congestion make location key – private estates and shopping malls.
“Government is also investing heavily in infrastructure, which is positive for economic activity and employment opportunities, which underpins the local housing market in each area. In addition, this infrastructure often is focused on public transport, such as the Gautrain in Gauteng and BRT buses in Cape Town, which opens up new housing markets by making them more accessible.”
For further information contact Pam Golding Properties on 021 7101700 or email email@example.com.