Johannesburg, South Africa

The Reserve Bank's decision to keep the repo rate flat at 7% was the only option, given a number of negative indicators. This is the word from Brian Falconer, CEO of Colliers Residential.

"With massive electricity hikes looming, upward pressure on oil ahead of the northern hemisphere winter and a volatile rand, the Reserve Bank's MPC committee would have been deeply concerned about inflation getting out of control," says Falconer. "The property market could certainly have benefited from a further rate cut, but we'll have to be content with a reduction of 500 basis points since December last year.

"At least we now know where we stand, with no further rate cuts possible until next year, and anyone sitting on the fence in the property market will now no longer have a reason to procrastinate."

The prime rate has dropped from a high of 15,50% last December to its current 10,50%, bringing relief to hard-pressed homeowners, who have had a significant amount of cash returned to them. But potential homeowners have held back, hoping for further rate cuts.

"There are more positive than negative indicators in the property market," Colliers notes. "Property prices are as low as they're going to go; the market is well stocked with bargains; there are many eager sellers; banks are again advancing credit; there are clear indications the property market as a whole is starting to move again, and it's time for buyers to get back in."

Colliers has ridden out the economic storm better than most real estate companies, Falconer adds. "We have continued to grow our base of operators through the recession, and we expect to benefit signally from the eventual upturn in the market."

But Falconer points to one dark spot on the horizon: "The Australian Reserve Bank has become the first central bank to hike its repo rate, and we may follow suit in the next few months. This would again have the effect of stifling the property market."

About Colliers International

Colliers International is a global affiliation of independently owned commercial real estate firms. The organization's 12,700 employees span the world in 294 offices in 61 countries. On a worldwide basis, Colliers manages 1.1 billion square feet, and has revenue of $US 1.6 billion.

Contact Information

Brian Falconer

brianf@colliersresidential.co.za

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