Dear Reader
THE RESERVE Bank cut its repo rate by 100 basis points to 10,5% yesterday, the biggest single adjustment in more than five years. What does this mean to home owners? If you have a bond of R500000.00 payable over 20 years it means a saving of R350.00 per month.
According to Central bank governor Tito Mboweni the repo rates should have been cut more “Interest rates should have fallen like in other countries”. He warned the South African public on National Television last night to take it easy, “It’s bad out there”.
An interview with property investment specialist, Tony Bales(right) of Bales Delaporte Commercial Property Dealmakers; What is your viewpoint on the rate cut and specifically in the area that you focus on, the commercial property sector?
“We expected a 1% rate cut but although it is welcomed we need more than 1% to turn our economy around as it is far deeper rooted. I expect a further 2% cut during the course of the year but 2% might still not be enough to pick up the economy. South Africa is part of the global economy and we will only experience our turn around when the global economy is showing a turn around. This is a major concern. The current global economy is having a negative effect on South Africa’s commercial and industrial property sector. Locals will have to make good decisions in the months to come that will hold water. Lots of tenants are experiencing serious hardship and unfortunately this will continue. England announced an interest rate of 1% and until the global economy recovers South Africa will have to follow suit.”
What is your viewpoint on the residential property sector?
"The residential property sector should show a quicker turn around as it is directly influenced by the individual. I believe that the interest rate cut is going to offer a relief but I don’t know if it will have an influence on residential property prices. Yes, it might stabilise it."
Berry Everitt, MD of the Chas Everitt International Property Group, says the latest rate decrease is a good "step in the right direction because it will send a positive message to both home owners and potential home buyers, especially when read together with the rate decrease that took place in December". He says that although it will take time to flow through the market it will help to restore consumer confidence in the economy, raise disposable income and slow down repossessions, which will underpin home values."
I expect the SARB to lower rates and the banks to lower interest rates to 13% by April 2009, to 12% by June 2009, to 11,5% in August 2009 and to 11% in October 2009. What’s your opinion? Let us know news@cyberprop.com
Enjoy!
The editor
