Some good news

[mahnmut]

I was recently tickled by a friend that I've been too negative on LJ lately. I mean, the term he used was 'angry'. While it's true that I sometimes boil, it's not actually in more than 1% of the cases. So I'll see to that. Internet could be misleading, as another friend said in response.

Anyway, here's some good news from the day, to balance things out :-)


Interest rates come down - The South African Reserve Bank’s Monetary Policy Committee has reduced the repo rate by 100 basis points to 8.5%. This takes the prime overdraft rate to 12% from 13% before, and will usher in further relief for cash-strapped consumers who are paying off cars and homes.

Yes, the monetary policy committee of the reserve bank has cut the repo rate by 100 basis points, offering further relief for homeowners on the back of the 2.5%-cuts earlier this year. The repo rate now stands at 8.5%, while the prime has been reduced to 12%. The domestic output and expenditure growth were declining or negative in the recent weeks. It's true that the growth outlook is dependent to a significant extent on a broader global recovery, but the signs are good. Despite the widening domestic output gap, inflation remained 'sticky', but was expected to continue on its downward path.

The year-on-year inflation rate as measured by the consumer price index (CPI) for all urban areas increased to 8.6% in February and then moderated to 8.5% in March. However, food price inflation continued its downward trend, increasing at a year-on-year rate of 14.7% in March, compared with 15.8% a month earlier. This looks encouraging.

Thursday's rate cut seems to be another step in the right direction towards stimulating the housing market as well. There were signs a turn in the market was nearer rather than further away, as most analysts said. Under normal circumstances, the reductions to-date in the interest rate would've already impacted positively on the property sales. But in these extraordinary times (with the outside factors of the global credit crisis and local bank liquidity and credit issues) the interest rate reduction hasn't yet had a significant impact on house sales. On the other hand, the rate cuts are now to some degree easing the burden on the consumers.

What's needed now to further stimulate the property market is for the liquidity crunch that banks are experiencing to be eased, and, alas, indications are that this is still some time away...

Having said that, there's no question that from a transactional perspective the property market has steadied somewhat. At a value level, house prices were still on a downward trend in the last weeks, and it was anticipated these would drop by a total of 10% this year. So we've still got quite some road to walk. However, this dropping trend is already slowing and indications are the turn in the market is nearer rather than further away.

Comments

<3

[abomvubuso.livejournal.com]

Blah. Dont take it too hard.

[mahnmut.livejournal.com]

Always.