Unan­i­mously con­fi­dent of a bright fu­ture

Es­tate agents wel­come sta­ble in­ter­est rates as good news for hous­ing and con­sumers, but are not sure how long this will last

Weekend Argus (Saturday Edition) - - PROPERTY -

A STA­BLE in­ter­est rate is good news for the hous­ing mar­ket and con­sumers, say es­tate agency bosses.

But they can’t agree on whether in­ter­est rate hikes are in the pipe­line for next year.

Seeff chair­man, Sa­muel Seeff wel­comed the lat­est de­ci­sion by the Re­serve Bank’s Mone­tary Pol­icy Com­mit­tee to re­tain the repo rate at 5 per­cent.

“Right now, a sta­ble in­ter­est rate is the best course for the prop­erty mar­ket and the econ­omy as a whole. Al­though there have been some calls to lower the in­ter­est rate, such a move could en­cour­age short term spend­ing, which the coun­try doesn’t need right now. It is vi­tal that con­sumers start sav­ing and that we en­cour­age and fos­ter a strong sav­ings cul­ture. Now more than ever, we would en­cour­age home own­ers to de­posit their an­nual bonuses and any spare cash into their home loans, which will stand them in good stead to weather fu­ture in­ter­est rate hikes.

“As we head into the hol­i­day sea­son, tra­di­tion­ally a pe­riod where im­pru­dence tends to out­weigh cau­tion when it comes to spend­ing, a sta­ble rather than fluc­tu­at­ing rate sends the right mes­sage. Al­ready, it is likely that a rate hike to­wards the end of next year seems in­creas­ingly un­avoid­able.”

In any event, he be­lieves the low rate has done lit­tle to stim­u­late eco­nomic growth and has c er t ai nly not en­cour­aged whole­sale prop­erty buy­ing. He says the con­tin­ued strin­gent mort­gage lend­ing cri­te­ria sim­ply does not sup­port an note­wor­thy in­crease in the num­ber of home loans granted.

“This year buyer en­thu­si­asm has been re­newed and there’s been a no­table uptick in ac­tiv­ity in the pri­mary hous­ing sec­tor in ma­jor ur­ban ar­eas. Al­though cau­tion re­mains the or­der of the day, trad­ing con­di­tions are at the best lev­els since t h e e c o n o mic d own­tur n . Un­nec­es­sary fluc­tu­a­tion or a pre­ma­ture in­ter­est rate hike is likely to dent con­sumer con­fi­dence.”

S e e f f b e l i e ve s t h a t a n im­prove­ment in the prop­erty mar­ket is good news across the board. It means that more South Africans are buy­ing homes – in the lower to mid­dle sec­tor of the mar­ket where it is needed the most, and in the up­per end of the mar­ket. Though con­di­tions re­main heav­ily in­flu­enced by the over­all con­sumer debt lev­els, a sta­ble in­ter­est rate en­ables those who can to take ad­van­tage of the favourable buy­ing con­di­tions. He says that more should be done to en­cour­age home own­er­ship and once again calls

‘It is quite likely that we will start see­ing an in­ter­est rate in­crease dur­ing 2014, which will put pres­sure on con­sumers’

for fur­ther eas­ing of the mort­gage lend­ing cri­te­ria and mea­sures such as full bonds and longer re­pay­ment pe­ri­ods for first time buy­ers.

The Mone­tary Pol­icy Com­mit­tee’s de­ci­sion to leave the repo rate un­changed at its his­toric low, is re­as­sur­ing for as­pi­rant and ex­ist­ing home buy­ers, says Dr An­drew Gold­ing, chief ex­ec­u­tive of the Pam Gold­ing Prop­erty group.

“This pro­vides a sta­ble en­vi­ron­ment con­ducive to mak­ing long-term fi­nan­cial de­ci­sions, such as buy­ing prop­erty, and helps fuel pos­i­tive sen­ti­ment in the res­i­den­tial prop­erty mar­ket. Bear­ing in mind that a va­ri­ety of fac­tors af­fect the MPC’s repo rate de­ci­sions, the repo rate is ex­pected to re­main un­changed dur­ing 2014. The com­bi­na­tion of a sta­ble and low in­ter­est en­vi­ron­ment cre­ates a cli­mate of cer­tainty which pro­vides fur­ther im­pe­tus for the prop­erty mar­ket,” says Dr Gold­ing.

Al­though the prime in­ter­est will re­main at 8.5 per­cent for the rest of 2013, prop­erty own­ers should make the most of the cur­rent rate be­fore pos­si­ble in­creases are im­ple­mented next year, says Adrian Goslett, chief ex­ec­u­tive of Remax of South­ern Africa.

“It is quite likely that we will start see­ing the in­ter­est rate in­crease dur­ing 2014, which will put slightly more pres­sure on con­sumers. Con­sumers have en­joyed a re­mark­ably low in­ter­est rate for the past few years with the prime in­ter­est rate drop­ping by a stag­ger­ing 5.5 per­cent since the prop­erty boom, which has opened up sev­eral op­por­tu­ni­ties to buy­ers who were pre­vi­ously un­able to af­ford prop­erty. As­pir­ing home­own­ers who have waited it out be­fore tak­ing the op­por­tu­ni­ties pre­sented in the cur­rent mar­ket may soon find them­selves miss­ing out if they don’t act now,” says Goslett.

He warns that favourable con­di­tions for buy­ers won’t last for­ever. “We have al­ready seen sig­nif­i­cant changes in the mar­ket with more sales over the past two years and things are cer­tainly look­ing up for sell­ers,” he says. The grow­ing de­mand for prop­erty has also pushed prop­erty prices up, with prices far be­yond those dur­ing the boom in some re­gions. He be­lieves buy­ers could soon find them­selves in a sim­i­lar sit­u­a­tion to that dur­ing the boom pe­riod.

“There are buy­ers who can buy prop­erty with cash, but most South Africans are de­pen­dent on fi­nance for buy­ing homes. It is ex­pected that the pre­dicted rate in­creases dur­ing 2014 will af­fect the buy­ers who want to en­ter the mar­ket, as well as ex­ist­ing home own­ers with bonded prop­er­ties,” says Goslett.

A WAY OF LIFE: Artist’s im­pres­sion of The Chelsea, Sig­natura’s lat­est de­vel­op­ment in Green Point, which echoes the laid­back life­style of Syd­ney.

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