Rates decision won’t impact on property market recovery

2010-05-13 15:18

The decision by the SA Reserve Bank’s Monetary Policy Committee not

to cut interest rates was expected and should not have any impact on the

recovery of the residential market, Jawitz Properties said.

Earlier, the bank’s governor, Gill Marcus, announced that the key

repo rate would remain unchanged at 6.5%.

“Interest rates are at a lower enough level to provide an impetus

for the market to gradually recover,” Herschel Jawitz, CEO of Jawitz Properties,

said.

“What is needed more than a drop in rates, is for the banks to

continue to ease their lending requirements and for consumer confidence to

improve especially at the upper and luxury end of the market,” he said.

Jawitz said the lower to middle markets which were most

interest-rate sensitive – up and down – were still finding the going with the

banks tough.

“This will continue to provide a challenge to a quicker recovery in

property prices and volumes.”

On the luxury end, consumer confidence was the key, he said.

“People have to feel good about what they are reading and hearing

before they will think about spending R10?million on a house.”

Saul Geffen, CEO of bond originator ooba, said that the decision to

keep interest rates on hold at 6.5% was expected.

“The decision to cut rates in March was a welcome relief for many

home owners in South Africa.

“However, the Reserve Bank has already indicated that further rate

changes are not likely in the near future so we expect rates to stay on hold for

the rest of the year before gradually increasing in 2011,” he said.

Overall, the signs were increasingly positive for the local housing

market, he said.

“We see a demand-driven recovery, assisted by maintained low

interest rates, a continued recovery in economic growth and a more stable job

market.

“We expect continued growth in house prices in excess of inflation

for the remainder of 2010.”

– Sapa


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