First National Bank’s property strategist, John Loos, says that while the hike in South Africa’s repo rate to 8,5% is generally negative for property, it is not expected to be the cause of any property trend changes.
Loos said that residential property had already started slowing a considerable time ago, and retail was set to start cooling as well, regardless of rate hikes.
“The Monetary Policy Committee raised interest rates by 50 basis points on Thursday as was largely expected. Undoubtedly, the rate hike is negative for property, but is not expected to be the cause of any property trend changes. This is because the residential property market and its building activity turned weaker a considerable time ago, and I had expected retail property to cool off regardless of rate hiking,” said Loos.
He added that the strong industrial and office markets would probably be driven by stronger forces in the form of a combination of solid demand growth and a scarcity of vacant space.
“I expect these property categories to, by-and-large, shrug off the current round of rate hiking, and continue to show solid returns,” concluded Loos. — I-Net Bridge