From Jawitz News
November 19, 2015
Herschel Jawitz CEO of Jawitz Properties says that the decision to raise interest rates will be another knock to an already delicate economy and financially fragile consumer. However these factors need to be balanced with the expectation of rising inflation in 2016 - a weak currency and the prospect of rising US interest rates.
Herschel Jawitz CEO of Jawitz Properties says that the decision to raise interest rates will be another knock to an already delicate economy and financially fragile consumer. However these factors need to be balanced with the expectation of rising inflation in 2016 - a weak currency and the prospect of rising US interest rates.
From a residential property point of view, demand for property has already slowed to some degree in 2015. A marginal impact on demand which remains firm, despite the economy, would be expected. The increase of 25 basis points will add an additional R170 per month on a million rand bond bearing in mind that this is after tax money or approximately R250 in before tax money at a 30% marginal tax. Add this to the last rate increase and buyers and homeowners need to find an additional R500 per month. The amounts are small but everything builds on each other.
“Property prices have been growing at a slowing rate in 2015 so there is no steam to take out of the market. In addition, despite there being fewer buyers than last year, stock is still in short supply and this should continue to keep property prices firm especially in the large metro areas. The simple fact is that the increase is a necessary evil that will save the country a whole lot of pain in the future,” he says.