Responding to the January interest rate hike of 25 basis points, a disappointed High Street Auctions Director Greg Dart said the MPC should have balanced inflationary concerns with the heavy economic burden already being carried by South Africans. “Industries that employ the majority of economically-active people in this country are haemorrhaging billions in revenue because of loadshedding that’s completely out of control.
“This has a direct impact on wages, which are in fact decreasing as cost-of-living expenses continue to rise. According to figures released just days ago in BankservAfrica’s Take-Home Pay Index, in real terms average salaries fell 6.9% last year. “Couple that with 2023’s headline inflation forecast of 5.4%, and it doesn’t take a genius to see that as an economy, we’re close to breaking point.
The ability to save is now beyond the means of most South Africans, who – if they’re lucky – survive pay cheque to pay cheque. Dart says the small silver lining with this announcement are that the repo rate hike – which now pushes prime lending to 10.75% – was capped at 25 basis points after three consecutive 75 basis point increases last year. “With any luck the repo rate will also cap at 7.5% later this year, and we might even see a rate cut again before the year is out.
“For the property industry, it means the first half of the year is going to be tough. Investors are likely to adopt a more conservative wait-and-see attitude, and the residential market is probably going to feel the effect of more properties coming to market with a much smaller pool of buyers able to commit. “On the positive side, for those able to spend at the moment, they may be able to get some good deals across real estate sectors. It’s a good time to buy if you’re not servicing a big mortgage.”
