Writing on the wall for another rates hike

With Statistics SA revealing that the country’s headline consumer price index rose at an annual rate of 7% in February, economists agree that the writing is on the wall for another interest rate hike this week.

The South African Reserve Bank Monetary Policy Committee meet on March 30 to discuss interest rates, and Nedbank is predicting a 25-basis point hike.

With the prime lending rate currently at 10.75%, this would take it up to 11.00 – the eighth interest rate increase in a year.

“Rising costs associated with load-shedding have not been good for business, and it appears that companies are now passing these on,” said Norman Raad, CEO of Broll Auctions and Sales.

Raad said landlords had begun to install renewable energy options such as solar panels and inverters, but that these alternative power solutions stripped away profits from the bottom line in the short term. “Taking these measures now secures their investment in the medium to long term as this is becoming a must have in the commercial space. Tenants and buyers are looking to future proof their productivity and properties that offer this solution attract a premium in the market place, meaning landlords and sellers will soon see a return on their investment.”

Kirsten Morgendaal, Head of Sales at Broll Auctions and Sales added, “The auction industry is in fact the ideal method of movable and immovable asset disposal for sellers as the sales turn-around time is quick, the buyers are genuine and have access to cash cutting out the trickiness of obtaining a traditional bond or credit, and the sales prices achieved are fair and market-related, so a win-win for sellers and buyers alike. Recent figures from our latest auctions reflect the sellers’ confidence in this method.”

The end of the interest rate hike cycle is nearing according to most economists which is good news for all sectors as well as the public in general.

The interest rate still remains well below that of its peak high at 23.99 % in 1998, and is normalising from its peak low of 3.5% in June of 2020. “The good news for consumers is that the dust is settling and growth indicators remain strong. We are seeing a recovery across the country in the commercial sector, while the real estate industry is one of few that has returned to pre-Covid figures and is in showing growth, proof that property is always a good investment even in tough economic times”.

For assistance on buying or selling property on auction, contact Kirsten on 074 111 7375 or ?[email protected]