Johannesburg, South Africa

"With rate cuts seemingly at an end, anyone sitting on the fence in the property market will now no longer have a reason to procrastinate", Colliers Residential said on Thursday.

Earlier, outgoing SA Reserve Bank governor Tito Mboweni announced that the Monetary Policy Committee had decided to keep rates unchanged at seven percent.

"The Reserve Bank's decision to keep the repo rate flat at seven percent was the only option, given a number of negative indicators," Brian Falconer, CEO of Colliers Residential said.

"With massive electricity hikes looming, upward pressure on oil ahead of the northern hemisphere winter and a volatile rand, the SARB's MPC committee would have been deeply concerned about inflation getting out of control," he said.

Falconer said the property market could certainly have benefited from a further rate cut, "but we'll have to be content with a reduction of 500 basis points since December last year."

He added that at least those sitting on the fence in the property market now knew where they stood.

"The prime rate has dropped from a high of 15.5 percent last December to its current 10.50 percent, bringing relief to hard-pressed homeowners, who have had a significant amount of cash returned to them.

"But potential homeowners have held back, hoping for further rate cuts," he said.

According to Falconer, there were more positive than negative indicators in the property market.

"Property prices are as low as they're going to go; the market is well stocked with bargains; there are many eager sellers; banks are again advancing credit; there are clear indications the property market as a whole is starting to move again, and it's time for buyers to get back in."

He said Colliers expected to benefit signally from the eventual upturn in the property market.

There was however one dark spot on the horizon.

"The Australian Reserve Bank has become the first central bank to hike its repo rate, and we may follow suit in the next few months," Falconer said.

"This would again have the effect of stifling the property market."

Trade union UASA said in the light of factors such as the risk Eskom's proposed tariff hikes posed to inflation and the fact that the global economy was showing signs of tentative recovery, the SARB's decision made good sense.

"In the past months the MPC's interest rate decisions have been of great help and brought great relief to workers struggling to make ends meet as a result of the recession.

"We remain hopeful that the committee's meetings in November and December this year may bring a Christmas present for workers in the form of lower rates."

About Colliers International

Colliers International is a global affiliation of independently owned commercial real estate firms. The organization's 12,700 employees span the world in 294 offices in 61 countries. On a worldwide basis, Colliers manages 1.1 billion square feet, and has revenue of $US 1.6 billion.

Contact Information

Brian Falconer

brianf@colliersresidential.co.za

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