Decision to retain repo rate at its current level welcomed

The decision made by the Reserve Bank’s Monetary Policy Committee was largely expected by the market as a result of the better than expected consumer inflation figure of 4.6% for June (lower than the market expectation of 4.8%), regardless of the weaker exchange rate.

Despite the fact that the currency fluctuation poses a risk of monetary policy tightening, analysts assume that while inflation stays with the 3%-6% target range, the Reserve Bank is likely to keep the interest rate flat for the remainder of the year.

The fact that we can expect more cost hikes on the back of a weaker currency and petrol price hikes means that the economy is likely to remain slow for the whole of 2018. Manning says that overall this will leave the property market weaker although there is a lot of ample growth in both turnover and prices.

Despite the challenges the economy is facing, the market is standing well, and while sluggish, there is still price growth and several reasons to buy. Many locations are witnessing excellent sales with especially the lower to mid-market sectors being quite active.

When there are not as much sales in the property market and finances are under pressure, the rental side of the market tends to do really well with an increase in demand for rental property. While rates are under pressure, the good news for landlords is that they can still rent out their property and at least continue earning returns.