Unchanged Rate Wont Deter Property Buyers
Category News
This week’s decision by the Reserve Bank’s Monetary Policy Committee (MPC) to leave the repo rate unchanged at 5,5% was widely expected, and will not have a major influence on the residential property market.
That’s the word from Berry Everitt, CEO of the Chas Everitt International property group, who says that with the home loan nominal interest rate having been cut in November to 9% – it’s lowest level in more than 30 years – there is already more positive sentiment in this market.
“We see this reflected in an increase in buyer visits to our websites and show houses, and a higher-than-expected increase in sales volumes over the past two months.
“And while another rate cut would have been great, we believe that the prospects for further demand growth this year are good in any case, especially if household debt levels continue to drop, wages / salaries continue to increase and inflation can be kept at the expected 4,6% for the year.”
However, he says, the group expects that residential property prices will only grow at an average of about 7% to 8% this year, given that there is still much surplus inventory to be absorbed.
“Nevertheless, we are now confident that the recovery in the market can be sustained – provided that the banks take into account the improving financial situation of many potential borrowers and take a more lenient stance on home loans.
“In fact, with interest rates at current lows there is so much interest among potential homeowners I would venture to say that the biggest barrier to home ownership at the moment is the banks’ negative attitude to most loan applications.”
Author: Barry Davies