Where we had previously anticipated possibly starting the year with a potential interest rate hike, the unexpected oil price drop and improved inflationary outlook is of course to thank for the unchanged interest rate, he adds.
Coming off the best year for property since 2009 that closed with a record December, we expected the good trade to hold at least for the first half of the year, save for an interest rate adjustment anticipated in view of the weak currency and high inflation at just short of 6%.
The downward oil price has not only lowered the inflation outlook to about 3.5-4% according to economists, but the fuel and transport savings has added a bit more back into consumer wallets, says Seeff. This, together with the holding off of an interest rate hike is especially important for first time home buyers and an added boost to affordability and demand.
This notwithstanding, we are not out of the woods yet and, this may well be just a temporary relief although, in view of the oil price dip and resultant downward inflationary outlook, some economists have speculated that interest rates may remain on hold for most of this year. Some have even ventured that there may be an outside chance of a drop in the rate, says Seeff.
Nonetheless, prospective buyers should remain cautious and budget carefully, allowing for the possibility of a rate hike. As is customary during the early part of the year, increases in basic living and utility costs associated with home ownership too is unavoidable, he says.
Buyers should also be mindful that Finance Minister, Nhlanhla Nene, signalled a warning late last year that the 2015 budget, due at the end of February, is likely to include tax hikes.
This notwithstanding, Seeff says that there is still plenty of pent up demand in the market and this, together with the still tight property inventory levels point to a positive outlook for the year. More so, with the added boost of a lower inflation outlook, fuel cost savings and no rate hike for now.
