Johannesburg, South Africa

Hesitant home buyers should now enter the market following the SA Reserve Bank (SARB) announcement on Tuesday that the key repo rate had been left unchanged at seven percent, Colliers Residential said.

"The Reserve Bank has probably cut interest rates for the last time this year, which means it is time for cautious or hesitant home buyers to take the leap and enter the market," said Brian Falconer, CEO of Colliers Residential. Since December, R3555 has been put back in the pockets of bondholders for each million loaned.  "This has reduced pressure on home owners and pumped billions back into the economy for discretionary spending rather than the servicing of debt."

He said it was "highly unlikely" that the round of interest rate cuts that began in December 2008 would continue this year. "We should view this decision as signalling the end of eight months of interest rate cuts, which means it won't get better, and potential investors should no longer continue to defer their entry into the property market," he said. "We don't see the market getting any easier than it is today."

The market has been sluggish for more than a year since it became evident that South Africa was also entering the global recession triggered by the US subprime crisis.  Buyers have not found sellers, sellers have been unable to obtain the bonds they did two years ago, and the banks have been fearful to extend credit given that the cause of the recession was related to property credit, and due to the lack of liquidity in the market. "There are very positive signs that the worst is over, so any further procrastination would be unwise," Falconer said.  "We have noted that Standard Bank, for one, has relaxed its lending criteria, and at least one other bank is advancing 100 percent loans for low-end property." Falconer said other positive signs included the sprouting of "green shoots" globally and the fact that several US banks had reported high levels of profitability.

He added that with government incentives, such as the Cash for Clunkers initiative, the automotive market was starting to turn, both in the US and Europe. "Inflation is declining to just outside the Reserve Bank's target range and the oil price is relatively low, but volatile and likely to start climbing ahead of a northern hemisphere winter." He said the rand had been strengthening ahead of the MTN-Bharti deal, and the gold price had surged through US1000 an ounce. "South Africa's balance of payments remains positive, with inflows sufficient to finance the deficit on the current account," he said. Falconer added that the worst of the property market's woes was over.  "If you continue to be uncertain or concerned, you could be missing out ... It's time to get back into the market," he said."