Property outlook remains bleak despite CPI reduction

by David de Waal on May 4, 2016 0 comments

Despite Stats SA announcing that Consumer Price Inflation (CPI) decelerated from 7% year-on-year in February to 6.3% in March, food costs in March were nearly 10% higher than in March 2015. The reduction in CPI for March is largely due to a 5% petrol price cut, and, although welcome, is unfortunately probably not the start of a series of monthly reductions.

The Reserve Bank will still be under pressure to raise interest rates this year – especially if a downgrade happens – so we don’t expect the property market to start improving soon.

Consumers are under financial pressure and may elect to rent instead of buy or opt to purchase a cheaper property. We’ve also seen many sellers switch to our low commission estate agency service so they can afford to reduce their selling price – and make a sale more likely – without impacting their back pocket.

The property market is still alive, but there is a far greater chance of it getting worse than getting better. The elephants in the room – downgrade, Zuma’s presidency, elections – will ultimately decide our fate.

However, it is not all doom and gloom and there are still opportunities within the local market if you do your research.

Property investment is a long term commitment and short term factors should not deter sellers and buyers from making intelligent investment choices.

David de Waal

Steeple – Low Commission Estate Agents

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