"The most recent 100 basis point cut comes on top of 250 points in cuts since December last year as the Reserve Bank tries to ameliorate the weakening economy," said Sanett Uys, director at Colliers International Property and Facilities Management.
"The repo rate is now 8,5%, its lowest level since October 2006. For property owners, that means repayments on a bond of R1,5m have dropped from R20,308 in December 2008 to below R16,516, or a saving of around R3,792 every month. Repayments on bonds of R500 have dropped by R1,264, bringing them down to R5,505, and repayments on bonds of R3m have come down by R7,584 to R33,033."
"That's significant," said Uys.
"However, the South African economy is still badly affected by the global downturn – particularly the mining and manufacturing sectors."
Uys pointed out that retrenchments were increasing as companies struggle to keep their heads above water and consumer confidence remains low.
Uys said that negative sentiment was reflected in the retail and motor vehicle sectors as both were severely down and would continue to decline as big expense items remained low on people's priority list. Middle- and lower-income groups are being hit the hardest.
A number of other factors were affecting the property market, not all of them good, said Uys, noting that in some cases inexperienced agents were still overpricing stock in the hope of securing mandates.
Uys also noted that correctly priced properties take an average of 180 days to sell; banks are under pressure and re-evaluating approved finance – Standard Bank says households owe banks around R1,1 trillion, the bulk being in mortgage advances; and that Colliers agents were reporting an upswing in show house attendance in some regions, particularly from investors, cautious though they may be.
"It's important to note that there are still active investors in the market, even globally, and they are looking for opportunities," said Uys.
"Property owners looking to sell will find buyers if their price accurately reflects realigned values, and investors will increasingly find buyers who have correctly priced their properties for sale, inexperienced agents notwithstanding."
Colliers research indicated that the best investment opportunities were:
- Where there is predicted population growth;
- Where rental growth is consistent and strong, with the result that the capital and rental return or yield is good;
- Where employment growth rate is growing, which serves as a form of security; and
- Where there is an investment infrastructure.
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