The forthcoming Monetary Policy Committee meeting will hopefully see some additional relief afforded to consumers in terms of a further reduction in the repo rate, with a resultant drop in the interest rate, said chief executive of the Pam Golding Property group Andrew Golding on Monday.
“With more rate cuts anticipated during 2009, whether these translate into a total interest rate reduction for the year of 3%, 4% or even 5%, there is no doubt that while these will take time to flow through the system, the immediate effect will be to stimulate more positive sentiment which is always a key driver in the marketplace — and for the economy in general,” Golding added.
He noted that such rate cuts would also help alleviate the pressure on those paying mortgages on their homes, and help increase affordability for those seeking to acquire their first homes.
Golding said the start of each calendar year generally tends to have increased transactional movement in the residential market, particularly among those relocating for business reasons.
“Although there are currently less overseas buyers than usually evident at this time of the year, we are still receiving enquiries from interested foreign buyers — including South African expatriates — as they perceive increased value in our property market, with sound investment opportunities currently available,” he said.
“We are also seeing an increase in the number of buyers prepared to commit to offers as buyers, and sellers have become relatively more acclimatised to the current economic scenario and more stringent lending criteria.”
Golding said it had, however, become apparent that the general requirement by financial institutions of at least a 10% deposit for the purchase of a home is creating major constraints — particularly for first-time buyers — with the knock-on effect of sustaining reduced transactional volumes.
“Generally and unsurprisingly, we also note a trend towards more cash deals as opposed to mortgage-financed sales in transactions than previously.”
“From a residential property pricing perspective, we anticipate that house prices are likely to decline this year [2009] by approximately 10% in real terms, with the start of a recovery probable towards the end of 2009,” Golding said.
“However, with increased positive sentiment we also expect transaction volumes [units] to increase by around 15% over 2008,” he added. — I-Net Bridge