Stable interest rate positive start for SA's property sector

The Monetary Policy Committee (MPC) of the South African Reserve Bank (Sarb) on Thursday decided to retain the repo rate at 5.75%, in what could be interpreted as a positive start for the country's property market.

This also meant that the prime lending rate, the interest charged by banks to consumers, will remain steady at 9.25 percent.

The decision is a welcome start, specifically acquisitions financed partly through debt instruments. 2015 promises to be another year of the survival of the largest funds in the commercial property space.

Governor Lesetja Kganyago made the announcement in Pretoria following a three-day MPC meeting. He said that the rand has been affected by domestic factors including the rolling power blackouts by Eskom.

In September, the repo rate remained unchanged at 5.75 percent, after it was increased by 25 basis points in July from 5.5 percent.

Chief economist at Nedbank, Dennis Dykes, said the real change since the last Monetary Policy Committee (MPC) meeting was indeed the collapse in the oil price, which translates to a collapse in the petrol.

FNB CEO Jacques Celliers advised that consumers have been cheered by lower fuel prices and we are seeing lower inflation on the horizon. We can expect further reductions in fuel prices and inflation during February, but this does not mean we should throw caution to the wind.

The announcement comes a day after the US Federal Reserve Bank also held its benchmark interest rates steady. It is expected that US interest rates will ‘normalise’ to a higher level in the second half of 2015.

Source: SA Commercial Prop News