Comment on interest rate announcement

MARCH 2013
Adrian Goslett, CEO of RE/MAX of Southern Africa

The decision to keep the interest rates where they are is the right one, said Adrian Goslett, CEO of RE/MAX of Southern Africa, after the announcement was made at the second Monetary Policy Committee meeting of 2013. Reserve Bank Governor, Gill Marcus said that the prime lending rate would remain unchanged at 8.5%, a decision met with very little surprise by those within the real estate sector.

Goslett notes that with the large majority of South African consumers and potential homebuyers dependent on loans or bonds for finance when purchasing a property, a change in the prime lending rate could have a massive impact on the property market and especially consumers who have already purchased a home. An interest rate increase, along with the recent petrol hikes and rise in housing utility costs, would have a substantial negative impact on the recovery of the economy and the property sector.

Since the peak of the boom period, the prime interest rate has been reduced by 5.5%, making bonds more affordable and opening up the market to more aspiring homeowners. He points out that the decision to keep the interest rate low and stable will continue to give potential buyers more opportunity to get into the property market, and it will also allow existing homeowners the ability to reduce the term of their loan by paying it off faster, without severely harming their monthly budget.

South African consumers should make the most of current investment conditions within the property market. The economic environment within the property sector favours buyers and many would be surprised at the opportunities that elements, such as the low interest rate and affordable pricing, have created.

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