This will provide much needed stimulation for the market and, after a very flat 2017, will hopefully be an energy boost to encourage buyers and investors.
Although the rate cut was largely expected, it is a welcome reprieve for consumers and property owners who face higher living costs due to the 1% VAT hike taking effect on 1 April.
Things have moved quite fast since the last interest rate meeting. The election of Cyril Ramaphosa as president of the ANC and of SA has been a very positive development for country, economy and property market.
Action around state capture, the prosecution of Jacob Zuma and the cabinet shuffle to return confidence to major sectors of government have all been well received by the market, business and the ratings agencies. Moody’s has for example just announced that it is keeping SA’s sovereign credit rating at investment grade and upgraded the economic outlook to positive.
Currently, inflation is at around 4% which is within the Reserve Bank’s target range of 3-6%. The rand also continues to perform well although it is always subject to a degree of volatility.
These developments are good news for the property market. While the outlook for 2018 is much better than last year, it remains largely a buyers’ market for the time being and sellers need to maintain a more conservative approach to their price expectations.
On the upside, the last year has seen lots of new stock come onto the market and it is an excellent time to buy property, especially if it is your primary home. Prices have remained fairly flat over the last 12-18 months as the market took a breather and there are many motivated sellers. This interest rate cut is a great incentive for hesitant buyers and there is no reason to wait.
SA property remains an excellent investment and we continue seeing stand-out performances. A recent international property study for example put Cape Town in the number two spot for price growth performance in the company of top global cities.
