Latest news
The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers.
Economists were unsure whether favourable inflation data would sway the MPC to lower rates. (25/03/2010)
THE CURRENT MARKET:
The drops in the interest rate is starting to come into play now. Prime is sitting at 10.5% at the moment and the interest rate might still come down again but that is not sure. It takes a few months for the interest rate drops to flow through the market and it is only taking affect now. This means that the market will come alive even more as time progress and all the interest rate cuts come into play. We have seen a huge increase of buyers in the market and our focus is now to get stock to sell. It is not uncommon for a house to be under offer and sold within days if it is priced right. The buyers are well informed and won't pay to much for a house though. The banks are also more willing to give loans and make their lending criteria more flexible. This is truly good news and a good sign for the economy to start recovering. (31/08/09)
INTEREST RATE:
The reserve bank governor Tito Mboweni cut the interest rate again this month by 1%. This makes the prime lending rate 11% from end of May. The previous cuts are starting to flow through into the market now. We are seeing an increase in buyers in the market. The banks however are still very tight with loans and this is a big issue in the market as well. Historically we see the effect of cuts in about 3 months. Currently it seems to be taking a bit longer but we are in the cycle now so every month things should be better and better. (28/05/09)
What did the 1st quarter deliver:
The first quarter results are coming out now for the countries economy and the housing market.
I know it is sounding funny when I say it but the economists are now realising we are in a recession. Previously they denied it but us on the floor selling everyday knew this long time ago.
The GDP growth they forecast will be -0.5% for the year. Overall the property prices has also dropped for the 5th quarter in a row now. The statistics show a decline of just over 3% for the 1st quarter. My statistics are going more towards 5%. The reason for this I think is that affordable housing (houses of 40m2-79m2 and priced at R430 000 or less)increased by 4,5% y/y in the first quarter of 2009. The average nominal price of luxury housing (houses valued at above R3,1 million up to R11,5 million) still increased in the first quarter of 2009, by 4,5% y/y (7,6%
y/y in the preceding quarter). If you take it in real terms it still declined but the luxury market is outperforming the rest of the market by far. I found this in our area as well. It seems the economy does not affect those people with that kind of money so adversely. ;) Wish I was one of them.
Another interesting trend that influence the average growth is that some areas actually had positive growth.
For the provinces Limpopo, Free state, North West and the Northern Cape had positive growth. Limpopo with 10%. The rest of the the provinces are negative with Western Cape -1.8% (lowest decline) and the Eastern Cape at -4.6% (highest decline).
The forecasts show with the economy that is receding and more job losses the property market will stay under pressure till the end of the year. In my personal experience we are already feeling the market is turning towards the positive.
BUIDING STATS:
Last year 21086 new building plans were passed in relation to this year's 13864 from Jan - March. That is a 34.3% decline. The biggest decline was in the townhouse and flat market were the drop was 59.6%.
This shows that the investors (if there are any left) are holding back big time. This segment is the main market for them because the rent to repayment are the best normally. This obviously impacts the current prices on these properties negatively. There is however light at the end of the tunnel. The clever people who buy now will get a good buy and when the market turns the demand may well be higher than the supply due to very little new developments. This will bring good capital growth to the clever investor.
Property is the one of the few long term investment that keep up with inflation. If you can afford it now BUY BUY BUY!
Source: Stats SA
Contact us to make an appointment to discuss investment properties.