“As noted in previous statements, the Monetary Policy Committee has to achieve a fine balance between realising its core mandate and not undermining short term growth unduly. The MPC has unanimously decided to keep the repurchase rate unchanged for now at 6% per annum,” said Governor Kganyago.
The decision comes as Statistics South Africa (Stats SA) Consumer Price Index (CPI) figures show that CPI slowed to 4.6% in August from 5% in July below market expectation of 4.7%.
Governor Kganyago said that a further contraction in Gross Domestic Product (GDP) in the third quarter is unlikely. This as the country’s GDP contracted by 1.3% in the second quarter. The central bank said that the rand depreciated by 9% against the dollar since the MPC’S last meeting posing an upside risk to the inflation outlook. “Growth is expected to remain constrained by global developments and associated uncertainty and volatility, low business and consumer confidence and electricity supply shortages,” explained the governor.
Dr Andrew Golding, Chief Executive of Pam Golding Property Group comments: “Many felt that the recent increase of 25 basis points implemented following the previous committee meeting in July was premature, especially given South Africa’s weak economic growth. With inflationary pressures stemming from external factors, including rand weakness, drought and state administered prices, a further interest rate hike would do little to contain these price pressures, but would rather negatively impact much-needed economic growth.
“For the housing market, another, immediate increase in the interest rate would in all likelihood dampen general consumer appetite for property acquisitions, notably those with higher debt, first time buyers aspiring to own their own homes and second home investment or leisure buyers.”
Dr Golding says of concern is the low level of economic confidence in general, as this is a key contributor to market sentiment. “With the US Federal Reserve Bank having held back on a rate hike at this stage, it is hoped this provides the SA Reserve Bank with leeway to keep the rate steady, at least for the remainder of 2015. What we do need is a kickstart for our economy to regain impetus and boost business and consumer confidence.
Kay Geldenhuys, ooba manager for property finance processing says: "The decision is a great relief to South African property owners who are facing increasing financial strains. The relatively low interest rate environment that currently still prevails is good news for the residential housing market as it gives prospective homebuyers an opportunity to acquire property and secure homeloan finance at an affordable cost of credit."
"The South African property market outlook for the last quarter of 2015 remains favourable with steady, although slower, house price growth, relatively low interest rates and continued lenders’ confidence," she concludes.
