Samuel Seeff, chairman of the Seeff Property Group, expressed disappointment with the Reserve Bank’s Monetary Policy Committee (MPC) decision to maintain the repo rate at 8.25% (resulting in a prime rate of 11.75%). Although anticipated, this decision is seen as detrimental to the economy and the property market.
High Interest Rates: A Strain on the Economy
Seeff emphasized that the prolonged high interest rates have been detrimental to both the economy and the property market. He argued that the Reserve Bank’s hawkish stance has been excessive. While inflation has eased, the high interest rates have not effectively reduced it, as the inflation is primarily “imported” rather than driven by domestic demand.
Seeff pointed out that instead of reducing inflation, the elevated interest rates have hindered economic growth. Consumers and homeowners are burdened with increased debt servicing costs, and living expenses have risen, while salary increases have remained modest. Recently, Standard Bank also expressed concern over the rising level of home-loan distress.
Desire for Property Ownership
Despite these challenges, there remains a strong desire for property ownership, reflected in the market’s surprising activity levels, even as overall transaction volumes have slowed. People are eager to buy and invest, but the high interest rates are a significant barrier.
Call for Urgent Rate Cuts
Seeff called for urgent rate cuts to stimulate the economy. He argued that delaying these cuts only inflicts more damage. A growing economy would also strengthen the rand, so currency concerns should not justify maintaining the current high rates.
Buyer’s Market Advantage
Despite the high interest rates, Seeff highlighted that it is still an advantageous time for buyers. Flat price growth means properties are available at prices similar to those two years ago, especially in the higher price bands. Buyers who can afford properties at the current rates will benefit when rates eventually drop, as both home-loan repayments and property prices will improve.
Favourable Lending Conditions
Seeff also noted favourable bank lending conditions, particularly for first-time buyers, who can qualify for 100% bonds (and up to 105% including costs in some cases). Additionally, first-time buyers earning between R3,501 and R15,000 per month may qualify for a housing subsidy under the Finance Linked Individual Subsidy Programme (Flisp). Furthermore, no transfer duty is payable on the first R1.1 million of the property price, offering significant savings.
