Expectations rise for a 15% year-on-year house price growth
(Mortgage) Last week’s decision by the Reserve Bank’s not to change interest rates from their current levels made at its second Monetary Policy Committee (MPC) meeting of the year is likely to reinforce market expectations of an average year-on-year nominal house price growth of around 15 percent and possibly even higher if the rate continues to remains stable.
Absa has reported a 15,5 percent average year-on-year nominal first quarter growth.
This is the second successive meeting – the first was in February - that the Reserve Bank has left rates unchanged following four successive 50 basis point increases at its meetings in June, August, October and December last year.
The decision has been met with overwhelming approval by the real estate industry. “Very positive” was Colin Sher, sales manager of Durban Point Development Company, initial reaction. The unchanged rate is likely to further already heightened interest in the Point’s Waterfront launch of its second phase shortly.
Keith Wakefield, CEO of Wakefields Estate Agents, complimenting the Reserve Bank Governor Tito Mboweni on his monetary policy, said the unchanged rate signalled further good stability for the property market. Wakefield reports market activity and transactions as “exceptionally good” although price growth had slowed in the top end of the market. He forecasts an annual average price growth for Durban of six to nine percent for properties over R900 000 and 10 to 12 percent for those below.
Chris Tyson of Tyson Properties believed the news would increase up demand, which was slightly culled by the recent Easter holidays and wait-and-see expectations of an increase in rates. He reports good first quarter trading for the group.
Broker owner Trudy van der Vlies of Richards Bay-based RE/MAX Marine, sees the unchanged rate as positive for the northern town’s coastal market. She reports “extraordinary” activity levels for Richards Bay with her company’s first quarter sales tripled over the same period of last year. She reports being “astounded” at some recent residential prices achieved, believing them much higher than their actual market valuations.