Delays in cutting the interest rate are causing more harm than good to the economy and property market, says Samuel Seeff, chairman of the Seeff Property Group.
After a promising start to the year, he said that property transaction volumes have now plummeted by 25%, with a monthly average of just 17,350 compared to 23,100 in 2021 when the interest rate was at 7.25%,” Seeff stated.
House price growth has also declined to below 1% nationally, Seeff said.
The economy was just beginning to grow again when the rate was below 10%. At 11.75%, it is simply too high and is damaging both the economy and the property market, he stressed.
He urged the MPC to take decisive action, stating that even a 25bps cut would send a strong signal that the bank is confident in the economy and that better times for growth are ahead.
“There is so much positivity in the country right now and the Reserve Bank should harness that. From the recent Springbok win to the successful formation of a Government of National Unity (GNU) and a more market-friendly cabinet.
“Foreign investment is flowing into SA stocks, the JSE has picked up, we are seeing good rains, and no Eskom outages for over 100-days,” Seeff said.
“We have seen a significant value erosion in the property market. This is concerning for the economy given that property is one economic sector with a significant multiplier effect and value chain that benefits from real estate transactions, from property taxes to agent commissions, attorney fees, movers, renovators, and so on. Positive growth in the real estate sector is also a catalyst for further housing and infrastructure development and growth,” said Seeff.
“We have not seen this much positive sentiment for some time,” he added, but the interest rate remains a barrier that is holding back any real uptick in the economy and property sales volumes and prices.
