Reserve Bank governor Tito Mboweni needs to take the proverbial bull by the horns and cut interest rates by a further 3% or more to kick start the residential property market.
So says Gerhard Kotzé, CEO of the ERA South Africa property group, who believes nothing less than a courageous move in this respect will do the job of correcting the damage brought to the property market by the global credit crisis and some patent over-reaction in the banking sector.
"There are signs now that the UK property market is enjoying a flicker of life. Media reports from that part of the world are of increased buying activity and a steadying of house prices. The British economy is arguably in a far worse state than that of South Africa but working in favour of its property market is its very low interest rate climate.
"Clearly it's time we followed suit in SA, not only for the sake of the property market but for the economy in general. Admittedly there has been quite a reduction in interest rates since December last year, but Mr Mboweni continues to hedge his bets by warning that South Africans should not expect ongoing reductions in interest rates.
"That's a mistake and one that's costing the country dear in that the property sector is a major generator of gross national product. Various commentators predict a slight recovery in the property market in the latter half of 2009 but my view is that a short, sharp boost is necessary to make any real impact and that the Governor should take the necessary steps sooner rather than later."
Issued by ERA South Africa