Unchanged Interest Rate Leaves Homes Market Static Says Leapfrog’s Ennik

While the decision by the SA Reserve Bank to hold interest rates unchanged is  in line with the consensus among economists and home market analysts  – and therefore comes as no surprise – it holds little cheer for the residential property sector says Ronald Ennik, a director of the nationwide Leapfrog Property group.

“Given the current economic fundamentals, a cut at this stage may well have been a bold move. Nevertheless, it would have brought a much-needed measure of relief to debt-burdened  homeowners. It would also have provided added traction to what has been a generally languid residential property sector,” says Ennik.

 “Cash-strapped higher income owners of homes in the upper end of the residential market – which has been the hardest hit by the economic recession – will be particularly disappointed. As long as this sector is in the doldrums, the market recovery as a whole will remain slow,” says Ennik.

“Nevertheless, it is essentially confidence and sentiment – and not interest rates – that are the biggest driver of home buying. Until we see an uptick on that front, the market seems set to remain more or less static in the nearer term, with home values marking time in the lower end of single digit growth,” Ennik concludes.

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