Despite the decision by the US Fed to retain its interest rate at the current level, usually an indicator of which way the Sarb may go, Seeff says there were compelling reasons and an opportunity for the Bank to step in with an interest rate cut, not just of 25bps, but even a more meaningful cut of 50 bps.

The news that inflation remained 3.2% for February provides further support that there is a window of opportunity given that inflation remains contained near the bottom of the Bank’s inflation target range while the currency has remained fairly stable. Seeff says it is regrettable that the Bank did not take advantage of the economic benefits which could flow from a lower interest rate in the current climate.

Notably, the interest rate is still 100 bps above the pre-Covid level while inflation has come down considerably, now at 3.2% for the last two months compared to the average of 4.4% for 2024, and 6% average in 2023. He says the gap between the interest rate and inflation remains one of the highest in the world (according to economist, Dr Roelof Botha).

Keeping the rate so high for so long continues to do more damage than good to the economy, especially when it needs vital stimulus to boost growth and job creation, the lack of which pose a far greater risk than inflation. Households are already burdened by the higher cost of credit, including home loans, on top of further Eskom tariff, VAT and tax hikes.

Seeff says the property market has kicked off the year on a busy note with sales volumes continuing to increase as buyers take advantage of the lower interest rate. The continued favourable mortgage lending conditions, along with the increase in the transfer duty exemption threshold is a boost for the market. Stock levels are coming down, and prices are likely to start increasing more meaningfully compared to the last two years.

The luxury property market has seen a particularly strong start to the year, especially in the Cape Metro area where we are seeing an influx of local and international buyers snapping up high value properties. This also correlates well with information from ABSA that confidence in the property market is at the highest level in 10 years.