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“Consumers could use some positive news right now, and this downward shift, albeit only a quarter of a percent, is important as it sends a positive signal to the market and hopefully heralds the start of a downward shift in the interest rate cycle. It will also impact favourably on market sentiment, and therefore activity in general,” says Dr Andrew Golding, chief executive of the Pam Golding Property group. “With inflation seemingly under control and the rand looking stronger, and against a backdrop of a sluggish economy, what South Africa needs is a stimulus for economic growth and investment”

Samuel Seeff, Chairman of the Seeff Property Group, says the cut brings the repo rate down to 6.75% (home loan base rate of 10.25%) will be a welcome saving for homeowners and will certainly boost the property market.

On the back of such good news, Seeff says he once again calls on the country to get its "house in order".

“The lack of action and economic and political will is disappointing in view of the continued business confidence and economic decline,” says Seeff.

Seeff further notes that although there is still plenty of activity to keep the property market ticking over, and it is still in a better position than post-2007/8, the market is shifting on the back of the poor political and economic outlook.

Despite the economic and socio-political challenges faced both locally and globally, Dr Golding says South Africa’s residential property market remains notable for its ongoing resilience and appetite for property investment.

“In a sense, one could say that it’s business as usual for the many citizens who are getting on with their lives and transacting in home acquisitions and sales for all the usual reasons,” says Dr Golding.

Seeff says the cut brings the repo rate down to 6.75% (home loan base rate of 10.25%), will be a welcome saving for homeowners and will certainly boost the property market.

“These include buying that first home, upgrading or downsizing according to changing lifestyle requirements, relocating for career moves or a desire for a different residential destination or region, buying a leisure home or a place to retire to, or acquiring property purely as an investment - including steady rental income generation.”

Overall, Seeff says the market is slower with fewer sales, properties are spending longer on the market, stock levels are rising and price growth is slower and stalling in most areas outside of the Cape.

“On the upside, the banks are still keen to lend, and today’s rate decision is good news in that regard. However, the banks are taking a more conservative approach to approvals and deposit requirements are on the rise,” says Seeff. “That said, the Seeff group is seeing a higher approval rate compared to last year, so this is good news for buyers.”

Seeff says the flat price growth also means good buying conditions, especially in Gauteng and other metros.

Dr Golding says there are two main segments that currently form the backbone of market demand - first-time buyers and those seeking sectional title properties.

“Top-performing sectors at present include the lower-priced band under R1 million and the smaller two bedroom sectional title market - both of which reflect the consistently strong demand from first-time buyers. Over and above this, steady activity continues in the middle and luxury segments of the market,” says Dr Golding.

Sandra Gordon, Pam Golding Properties senior research analyst, says South African demographics are strongly positive for the housing market.

“The local population is young, with approximately two thirds of residents under the age of the typical first-time buyer (34 years) and hence not yet in the housing market. This will ensure continued strong demand from this burgeoning section of the market, particularly as a new generation of savvy young professionals reflect a growing aspiration to gain a foothold on the property ladder by investing in home ownership,” says Gordon.

Dr Golding says there are two main segments that currently form the backbone of market demand - first-time buyers and those seeking sectional title properties.

“The major metro markets are likely to benefit most from this demand, since South Africa’s population is urbanising at a rapid pace causing major metro populations to become both larger and younger.”

Gordon says affluence is currently a source of weakness for the national housing market as South Africa’s economic growth remains subdued.

“However, economic activity remains buoyant in several major growth nodes across the country. Cape Town, Gauteng and the North Coast of KwaZulu-Natal are all experiencing substantial private sector investment in major mixed-use developments, while government continues to invest heavily in infrastructure. And when there is economic activity and job creation, there is growing affluence and a vibrant local housing market,” says Gordon.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that the decision to lower the rates will bring much-needed relief to homeowners and consumers who are still coming to terms with the continued rising cost of living. However, whether the rate cut will stimulate the property market will remain to be seen.

Goslett says uncertain policy and the recent credit downgrades have negatively impacted consumer confidence, which has slowed the market in most areas throughout the country. He says that a slower economy and rising unemployment rate has also played a role in the property sector, resulting in the decline of freehold property prices.

“During the second quarter of the year, the average price of freehold property declined from R1 161 481 to R1 139 604. The muted inflation of freehold homes can be largely attributed to the slower South African economy and rising unemployment rate,” says Goslett. “The unemployment rate in South Africa is currently at 27.7%, the highest it has been since 2008. The struggling economy and significant unemployment rate poses a threat to household income growth and erodes affordability.”

In turn, Goslett says demand for property is constrained, which has negatively affected property prices.

“We hope to see some improvement in the demand on the back of the rate cut, but sellers still need to be aware of the shifting market conditions. Sellers will now need to get their 'house in order' so to speak. Ensure your property is in the best condition possible, price it at the right level and grant a sole mandate to an area specialist if you are serious about selling,” says Seeff.

“Most buyers now do their search online and will simply overlook your property if it is overpriced or listed by multiple agencies. Be mindful of not just turning down offers unless you are quite certain that you can wait. Buyers are also now looking for more negotiability,” advises Seeff.

On the whole, Seeff says the market is still holding up and well-priced property is still attracting attention. “Hopefully, today’s cut will provide a much needed boost for the market and the economy,” he says.

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