2016 Feb 01 - Interest Rate Increase Detrimental to Property Market
Network feels strongly that the the latest half point interest rate
increase will do more damage than the good that was intended," says
Colin Fibiger, CEO of Property Network.
The move was predictable considering
a jump in inflation from 4.8% in November last year to 5.2% in
December, as consumers battle with with rising costs of essentials such
as food, fuel and energy.
"While we understand their inflation targeting, we beleive interest
rates should not be viewed in isolation with the CPI but holistically
within our overall economic situation'" said Fibiger. "We believe that
the depressed state of our economy is the more critical issue at the
moment and any increase in interest places yet another barrier on the
road to growth."
"Our increases in inflation have been driven by a falling rand, poor
fuel buying and management strategies, Eskom mismanagement and the
overall lack of insight into the agricultural sector," he said. "These
are all issues which can be addressed through responsible governance
rather than playing with interest rates."
On a bond of R750 000, the hike is going to mean an additional R250
instalment per month, which might seem insignificant but for many
homeowners, current and potentially, it is a make or break number for
affordability amongst many other cost of living increases.
The lack of growth in the economy, conbined with investor insecurity
and negativity means that SA will teeter along at 1.5% GDP growth,
which in real terms means we are actually going backwards.
"This trickles through to investment markets such as property, and we
believe that any positive predictions for the property market will be
proven wrong," said Fibiger. "And although this creates what is
popularly named a 'buyers market" , the concept holds little water if
sellers are sitting put due to economic circumstances."
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