Steady repo rate mirrors stability in residential property market

The local property market of South Africa remains stable and hopeful after the May announcement from the Monetary Policy Committee that the repo rate would remain unchanged due to a less-than -certain local and global environment. With the rand recovering but still diminished and the turmoil of an increase in VAT, coupled with fuel cost increases, this was certainly good news.

According to Dr Andrew Golding, chief executive of the Pam Golding Property group, “growth prospects for the housing market are definitely improving, so there is some upside on the horizon, but what we need now from the Reserve Bank is a steady hand in regard to the repo rate. Fortunately, this seems to have been the prevailing opinion.

The property market, however, has not seen as much of a slow down as some expected, with a new type of buyer emerging. “Our country is fortunate in that we have a young, growing population which has yet to enter the housing market. With affordability considerations making sectional title properties the preferred entry point for first-time buyers, demand for sectional title properties is likely to remain brisk for the foreseeable future.”

With the development of the ‘sharing economy’ as a direct result of modern economic hardships, sectional titles appear to be on the rise. The option serves to cut down on maintenance and utility costs and allows young people who would otherwise not be able to enter the property market to get a foot in the door.

“As FNB often refers to first-time home buyers as being the most sensitive to the economic environment, they are likely to be the first to respond to improving market conditions, so we would expect to see an increase in demand from this sector of the market, further reinforced by the appetite among banks to extend mortgages.” says Dr Golding. Something to consider if you’re weighing property for purchase in Pretoria East.