Herschel Jawitz CEO of Jawitz Properties has welcomed the announcement by the SARB to cut interest rates by 25 basis points.
“With the latest inflation figures comfortably within the 3-6% band and the downgrade risk from Moody’s avoided for now, the Reserve Bank needed to show consistency of policy. If rates weren’t cut today then I’m not sure under what circumstances they would ever be cut. Despite the looming increase in VAT and the petrol price levy, consumer confidence will receive a much needed boost from the rate cut. The impact of the rate cut will be a decrease of R170 per month on a million rand bond over 20 years.
According to the latest FNB Research, South African consumers are in a better financial position in terms of debt to income levels, which will be further improved by this rate cut. Even with improved sentiment as a result of ‘Ramaphoria’ the residential market remains sluggish with sales volumes tight and property price growth flat. The rate of mortgage lending from the retail banks has improved as has the average rate concessions given to buyers, which will be helped by the rate cut.
The rate cut will certainly give buyers more food for thought, however, it will still be some time before the imbalance between supply and buyer demand translates into better price growth. Improved consumer and business confidence will continue to be the key driver in the recovery of the residential market.”