‘Another cut will reduce the strain on disposable income by lowering the monthly repayments on all forms of debt, including home loans, car repayments, and credit card debt.’
If the South African Reserve Bank (Sarb) announces another repo rate cut, as economists anticipate, the property market will gain momentum, and consumers are advised to take advantage.
Sarb’s Monetary Policy Committee (MPC) will meet on Thursday to discuss whether to take the route most people expect.
Herschel Jawitz, CEO of Jawitz Properties, states that if the announcement is another cut, consumers will significantly benefit, as they can expect to have some money left at their disposal.
“Another cut will reduce the strain on disposable income by lowering the monthly repayments on all forms of debt, including home loans, car repayments, and credit card debt.”
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Money saved on property repayment
He says each rate cut may be marginal, but the overall impact increases.
“On a million-rand home loan, the cumulative decrease in payments if 25 basis points cut rates this week will be R515.19 per month.
“There is no doubt we have seen a shift in sentiment since the elections in May last year with the GNU, the elimination of load shedding for the most part, and lower inflation.”
Uptick in sentiment for property
Jawitz adds the uptick in sentiment has been positive for the residential market.
This has increased buyer demand, especially in areas like Gauteng, which has experienced an oversupply and no price growth in recent years.
However, he adds that it will take some time before the increase in demand translates into price growth, but further rate cuts will undoubtedly add to the positive momentum in the market.
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More cuts in 2025
Due to higher inflation and geopolitical risks, it remains uncertain if there will be more cuts in 2025 after Thursday’s anticipated cut.
Nicky Weimar and Johannes Khosa, economists at the Nedbank Group Economic Unit, said they expect a cut on Thursday due to the benign inflation outcomes of the past two months and a relatively subdued inflation outlook.
They pointed out that inflation is forecast to drift upwards in the months ahead but will still average a muted 4% in 2025.
“Mild upward pressure will likely come from food and fuel prices as they climb off a much lower base.
“Increasing global food prices and a weaker rand are expected to offset the downward pressure exerted by higher domestic food production, which should benefit from good rains over the past two months.”
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