Whatshot
Property Talk
Property Talk
Date: 2016-09-30
The South African Reserve Bank published its recent Monetary Policy Committee Statement on 22nd September 2016, which provides a good overview of where we find ourselves from a macroeconomic perspective.
The good news is that our CPI inflation rate is now at 5,9% (August 2016 figures) - just within the 3-6% target range the SARB sets itself and around which its policy works. Producer price inflation remains higher at 7,4% which tends to indicate that the downward trend in CPI from 6,3% in June, to 6% in July and 5,9% in August may not be sustained in the short term.
Manufactured food inflation has been impacted by the severe drought we have experienced and measured 12,6% in July. This was the highest level since January 2009. Producer price inflation for agricultural products is reported to remain around 20%.
The SARB is predicting that CPI inflation is expected to peak in the fourth quarter at 6,7%, and then start to decline into 2017. Inflation is expected to average 6,4% in 2016 and 5,8% in 2017.
The forecast for 2018, if you can imagine looking so far ahead, remains at 5,5%. It is interesting to note that while our domestic economic growth has been sluggish and domestic new vehicle sales continued their negative trend in July and August.
Similarly our average national activity in property sales may be regarded as relatively flat, but in high growth areas such as the greater Ballito region our property market can be described as very active across many price categories.
The migration into our area continues and people are making decisions to rent and buy along the Dolphin Coast.
The surprise 3,3% annualized growth in GDP recorded in the second quarter of this year has ensured that the recessionary talk and pressures have abated for now.
The SARB is predicting annual GDP growth of 0,4% for the 2016 year. That's what you call treading water. The leading economic indicators are not showing a rebound as yet in economic activity, which keeps the economists on a sober trajectory.
The monetary policy committee decided unanimously to keep the repo interest rate at 7% implying that prime interest rates charged by the commercial banks remain unchanged at 10,5%.
For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.