Property group urges SARB to cut interest rates for economic growth and job creation
Lower interest rates will reduce the cost of financing homes, thus enabling a higher affordability at a given monthly financing payment.
Image: Simphiwe Mbokazi / Independent Newspapers.
A South African property group has reiterated its call for the South African Reserve Bank (SARB) to step in with an interest rate cut as a vital stimulus for economic growth and job creation.
National year-on-year house price inflation has maintained a modest pace of 2.8%, according to the latest figures from Lightstone's Property Index. This steady, albeit sluggish, trend is echoed in the RE/MAX National Housing Report for the first quarter of this year, which reveals a 2.1% increase in average house prices compared to the same period in 2024.
With Consumer Price Inflation (CPI) sitting close by at 2.7% as of March, these figures paint a nuanced picture of South Africa's residential property landscape.
As the economy stands at a pivotal juncture, a robust cut of at least 25 to 50 basis points is not just desirable but a critical imperative, according to Samuel Seeff, chairman of the Seeff Property Group.
He said the country simply can no longer bear keeping the interest rate so high for so long. As it is, he said the overly cautious approach by the bank has missed at least two opportunities to provide relief to consumers and the economy.
'The pressing challenge of unemployment simply can no longer wait. A decisive move by the SARB now would signal a commitment to revitalising economic activity. It would also provide much-needed support to businesses and consumers, and facilitate an environment conducive to investment and job creation,' Seeff said.
The property group said the case for such monetary easing is strongly supported by the current inflation landscape. It said despite the recent benign increase in inflation to 2.8%, it remains comfortably below the Reserve Bank's 3-6% target range.
Despite headwinds out of Washington, it said the rand has also strengthened to below R18 to the US dollar.
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At the time of the open yesterday, the USDZAR traded at R17.88, according to Reezwana Sumad, research analyst at Nedbank CIB.
'The USDZAR traded steadily weaker over the course of the session to close the session at R17.92. Since the close last night, it has traded incrementally weaker, and the USDZAR is trading at R17.98 currently this morning.
"The major currency pairs have also lost ground to the USD, with the EURUSD trading at 1,1305 this morning and the GBPUSD at 1,3470. Possible trading range for the USDZAR today(Wednesday) is R17,80 to R18.15,' Sumad said.
She added that the local markets have traded cautiously over the week thus far and are likely to remain so ahead of the SARB's MPC. On the international front, she said headlines from the US continue to provide the catalyst for market activity.
Seeff said the prevailing remarkably low inflation level indicated that demand-side pressures are relatively subdued and the risks of igniting an inflationary spiral through a rate cut are minimal at this stage.
He said the stability of the currency provides further mitigation, thus providing a valuable window for the SARB to implement a more accommodative monetary policy stance that directly benefits the domestic economy.
According to data analysed by Lightstone, which evaluated property bought by a natural person and where the transaction was for a single property, young homeowners are entering the market later than they did in the past, and are opting for bonded, secure living.
In 2024, people aged between 20-35 (youth) accounted for 30% of residential property purchases, down from 36% in 2019 and 41% in 2014, with tough economic conditions and changing lifestyles cited as the likely reasons behind the shift.
While youth accounted for 30% (52 500) of residential property transactions in 2024, it was the second largest group behind the Settled category (36-50) at 43% (76 000). The Mature category (51-64) (38 000) accounted for 21%, while the Pension category (65 and older) accounted for 6% (10 000).
While the recent rate cuts have provided some relief, Seeff said the benefits have now been eroded by keeping the interest rate at least 100 basis points above the pre-Covid rate. He said time is ticking and the country simply can no longer wait.
Seeff said there is now a golden opportunity for the bank to act boldly within the available monetary policy space to address the urgent needs of economic recovery and expansion without jeopardising its price stability mandate.
A rate cut would inject much-needed momentum into the economy by lowering borrowing costs for businesses and stimulating investment while adding more money into the pockets of consumers to spend in the economy, he said.
The property group said while a 25bps cut would be most welcome, they urged the Bank to provide a more robust cut of at least 50bps as an immediate injection of economic confidence to kickstart the economy.
'Naturally, the property market, which currently lags the pre-Covid volumes, will also benefit from a more pronounced rate cut. Aside from enabling more first-time property buyers to get into the market, it is an important economic contributor with a significant economic multiplier benefit,' Seeff said.
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Let me further make explicit and unequivocal that, notwithstanding the above, colonialism was both real and a primary determinant in shaping our history and socioeconomic architecture. In addition, the rediscovery of colonialism is essential to the final burial of the idea that apartheid — the racial organisation and structure of South Africa — began only in 1948, when the Calvinist Afrikaners, unlike the nice, liberal English, took over the running of South Africa. 3 The colonisation supposedly in need of decolonising the mind The left in South Africa, Europe and the US were/are leading advocates of a decolonisation centred on universities and what is taught there. With South Africa this time being the unusual vanguard, meant Britain and the US — particularly since the Black Lives Matter uprisings of summer 2020 — catching up with the demands made by South African students five years earlier. 'Among the most visible targets' of this catching up, Pranay Somayajula notes, 'were intellectual and cultural institutions — universities, museums, archives, and the like — which came under pressure to 'decolonise' through gestures such as land acknowledgments, renaming buildings, repatriating looted artifacts, and reworking curricula to more adequately 'centre' black and indigenous voices.' This forced European institutions to reckon with their complicity in nineteenth- and twentieth-century empires, North American institutions to reckon with their complicity in settler-colonial violence against the continent's indigenous peoples, and institutions to reckon with their complicity in the trans-Atlantic slave trade. Somayajula's conclusion is that this focus 'on the institutions that function as pillars of Western knowledge production constitutes in many ways an indictment of Western epistemology itself… Implicit in this critique of dominant forms of knowledge production is a call to uplift in their place the indigenous ways of knowing and being that have been suppressed by the same processes of colonial violence and dispossession in which these institutions were (and are) complicit.' South Africa's student rebellion of 2015-17 provides a case study of what this means in practice. The student who threw the poo at Rhodes' statue that sparked the rebellion came dressed as a mine worker. The Marikana Massacre of 2012 is a stark reminder that the problem is not colonialism, or Rhodes' dead legacy, but the awful power of his very-much-alive mining descendants, for whom colonialism is rightly history. The exclusive focusing on the colonial insult symbolised by Rhodes' statue leaves this living legacy untouched. Shouting for the removal of other 'white colonial' names — like in 'Jameson' Hall — makes it very easy for the university authorities to agree. It is easy for them to do so for it serves as a distractive anachronism. Focusing on our formal colonial past obscures the inconvenient present and its truth that UCT is heavily reliant on the various post-colonial forms of Rhodes' legacy for its current funding; a reliance reflected in so many of the corporate names that now festoon supposed 'academic' buildings. Indeed, the entire corporate takeover of all universities, not just UCT, is the living legacy of Rhodes, the mining magnate/politician. This ought to be a prime focus of students who describe themselves as radical. Instead, they divided themselves on so-called 'racial' lines and, as a final mocking irony, did so using the 'races' Rhodes did so much to institutionalise as part of his divide-and-rule legacy. His contribution to the forced creation of an African working class with a ready and self-replenishing supply of dirt-cheap labour for his gold mines is a prominent feature of his legacy. The supposedly 'black students' demanding the removal of the offending statue bring warmth to the coffins containing the heroes of the apartheid pantheon, beginning with Dr Hendrik Verwoerd. These apartheid architects argued that the four 'races' of apartheid South Africa reflected a natural order in which each 'race' had to live separate from the others because of their natural differences and in-born wishes. 'Coloureds' and 'Indians' are not black, according to the students who accused the formerly white universities of still being predominately 'white'. Students were not welcome at some of the student gatherings because of their 'whiteness', even though they fully supported the 'black' campaign to remove Rhodes from UCT as part of the decolonisation campaign that swept the country. Rhodes, too, would have greatly enjoyed this spectacle of how students allowed the 'races' he helped manufacture to divide themselves, even while campaigning against his 'colonial' legacy of dispossession and subjugation. Colour-coding access to scarce resources is the main hallmark of the new, post-apartheid, non-racial South Africa. We'll be returning to this issue in due course. The right wing has also been prolific in its understanding of what decolonising means. The well-known academic, Professor William Gumede, of Wits University, provides one such example in his 2022 Daily Maverick article, ' African economic transformation demands a radical shock to failed post-colonial system '. His article begins: 'Several types of collective mindset changes drove the astonishing industrial transformation of the East Asian developmental states from similar poverty levels to their African and developing country peers, to levels of development similar to or better than those of their former colonial occupiers.' And ends: 'If… South Africa and other African and developing countries want to mimic the extraordinary and radical economic transformation of the East Asian tiger economies, (they) will have to undergo drastic individual and collective mindset changes, and overhaul old institutions, behaviours and customs. Without such a shock to thinking patterns, they will stay locked in mass underdevelopment, poverty and instability.' A single word defines his remedy: entrepreneurship. It is this, he contends, that has transformed all four of the countries he mentions: Japan, South Korea, Taiwan and Singapore. What he singularly fails to mention is that the first three countries all owe their good fortune to the privileges the US allowed them as an integral part of the post-World War 2 challenge posed by both the Soviet Union and the then China. Highly selective perception is required to see Singapore as a success story, as detailed in 'Singapore — little to sing about despite Greg Mills' call for encores', my January 2024 response to a Daily Maverick article by Greg Mills. (This response is the only one never published by the Daily Maverick but is available on request.) Franz Fanon now enters the story with his seminal book, first published in 1952, Black Skin, White Masks. Many worldwide have long attributed the need to decolonise the mind to this book. Yet 'decolonise' does not appear in the book, not even once. It is, indeed, part of his book, The Wretched of the Earth. This difference is not an academic quibble. It alerts us to the confusions caused by the misuse of colonialism and why that matters. Considerably.
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