Property hails rate cut

There were signs a turn in the market was nearer rather than further away, said chief executive Andrew Golding.

"Under normal circumstances, the reductions to date in the interest rate would have already impacted positively on property sales.

"However, in these extraordinary times – with the compounding factors of the global credit crisis and local bank liquidity and credit issues – the interest rate reduction has not as yet had a significant impact on house sales," he said.

Earlier, SA Reserve Bank governor Tito Mboweni announced a 100 basis points cut in the repo rate.

Golding said the rate cuts had to some degree eased the burden on consumers.

"What is needed to stimulate the property market is for the liquidity crunch that banks are experiencing to be eased, and – regrettably at present – indications are that this is still some time away.

"Having said that, there is no question that from a transactional perspective the property market has steadied," he said.

At a value level, house prices were still on a downward trend, and it was anticipated these would drop by a total of 10 percent this year.

However, this trend was slowing and indications were the turn in the market was nearer rather than further away, he said.

Unrealistic sellers were now few and far between.

"We have a scenario where a much more realistic market exists – sellers are motivated and more accepting of the current situation."

Each drop in the interest rate was a further, significant step in the right direction towards aiding the recovery of the housing market, and the downward trend in interest rates would hopefully continue.

"With the stabilisation of sales volumes, coupled with further interest rate reductions, it is hoped we will begin to see at least an incremental improvement in transactional activity as affordability improves and enables more consumers to meet current bank lending policies."

Golding said the fact South Africa had accomplished another free and fair democratic election was a positive achievement, although it was premature to ascertain any impact on the property market.

"Naturally there is a wait-and-see attitude of expectancy, to see what the new president and government will usher in by way of changes.

"As with any change, there is a sense of hope that the legacy of good, well-considered decisions will continue, in order to create and indeed maintain a sense of stability in these uncertain economic times."

A key imperative was to stimulate the economy and boost growth.