Property baron sees November rate cut

We are going to see another 0.5% drop in interest rate at the next Monetary Policy Committee meeting to be held next week on November 17 and 18. This will be good for the economy and for the question of keeping the rand from strengthening - although I don't believe it will have a huge impact there. After this further 0.5% cut I think the interest rate will stay pretty static and stable during the course of 2011. Inflation seems to be in check, so I don't think interest rate movements are going to be that significant in 2011, if they happen at all next year.

He also does not foresee much house price growth next year. "I think the market is going to be pretty flat until the last quarter of next year - at which point I hope we will get a little more steam and activity in the marketplace. The whole market is being dictated by the banks' willingness or otherwise to lend to purchasers, and their preparedness to do so is being hampered by the high debt to income level. Until we see this changing, the banks are still going to be conservative in their outlook.

This is a market which escaped the significant drops which were seen in other parts of the world - and we did well to do avoid that. However, I think sales levels will be similar to those in 2010, and that this will continue for the most part of 2011, with a bit more activity as we get into seasonality at the end of 2011.

The main market segments in I expect sales to take place is the under R1.5m range. Given that the interest rate is at a 31-year low, there will be activity there, but again this will be muted by the banks' ability or preparedness to lend to or select deals to finance."

*Samuel Seeff is chairman of Seeff

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