Property News - February 2009
Welcome to our property investment newsletter, the aim of which is to keep you up to date and informed as to the most recent property trends.
With England having recently made a further 2 interest rate cuts, down to 1.5% on the 8th of January 2009 and then further down to 1% on the 5th of February 2009, this should provide some respite for a struggling British property market. (See the 5th article in this month’s newsletter)
The South African Reserve Bank has also now taken the decision to reduce its prime overdraft rate from its peak of 15.5% on the 13th of June 2008, with the first cut of half a basis point, down to 15%, on the 12th of December 2008 and then a full basis point, again on the 6th of February 2009, down to 14%.
Many home owners and overextended investors are now breathing a sigh of relief and looking forward to the next Monetary Policy meetings in the expectation of further interest rate slashes.
This cut, which takes base rates to their lowest level in the 300-year history of the Bank of England, demonstrates that the Monetary Policy Committee recognises the serious challenges facing the economy.
According to Absa’s calculations, nominal annual average house price growth in the middle segment of the market slowed down to below 4% in 2008, which was the lowest price growth recorded since 1996.
According to a recent article in the Harvard Business Review, the best investors do more than just survive a downturn; they position themselves to thrive during the subsequent upturn. History has proven that the best deals are in fact concluded in downturns.
To date, government has conducted land acquisition and restitution claims based on the “willing-buyer, willing-seller” model, which, as stated in the Bill, originated from the compensation scheme provided for under the Expropriation Act, No.63 of 1975.
The Monetary Policy Committee is clearly trying to get mortgage providers to increase their lending activity. Rate cuts should reduce the wholesale cost of funding, making loans and mortgages cheaper to both the lender and the borrower.