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Send  Share  RSS  Twitter  19 Nov 2009

PROPERTY: SA Reserve Bank Backs Economy Over Property

 





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The latest repo rate decision by the SA Reserve Bank means no festive celebrations for the property market, says Brian Falconer, CEO of Colliers Residential.

"We would have been delighted had Gill Marcus seen fit to cut the repo rate by a further 50 basis points in her first act as Governor of the SA Reserve Bank," says Falconer. "It would have been just the shot in the arm the property market needed ahead of the festive season.

"Added to the 500 basis points cuts we have enjoyed over the last 12 months, an extra rate cut would have improved the mood of the property market, and encouraged ence-sitting buyers to make a decision, especially as they would have had time on their hands to go home-viewing in the holiday period," adds Falconer.

Factors that would have swayed the MPC's decision:

Factors in favour of a rate cut:

The strong rand, which cuts the cost of imports; steady inflation; the relatively low oil price; the country's positive import/export balance; and the need to stimulate the economy.

Factors against a rate cut:

The looming Eskom price hikes; paradoxically, the strong rand, which harms exports and therefore jobs; the oncoming winter in the northern hemisphere which always pushes up the oil price; rand volatility; and retail spending over Christmas which will mean significant credit extension


 
 
 
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