The Reserve Bank has probably cut interest rates for the last time this year, which means it is time for cautious or hesitant home buyers to take the leap and enter the market, said Brian Falconer, CEO of Colliers Residential on Tuesday, in response to the decision by the bank's Monetary Policy Committee to hold the interest rate at seven percent.

Falconer said since December R3555 had been put back in the pockets of bondholders for each million loaned.

This had reduced pressure on homeowners and pumped billions back into the economy for discretionary spending rather than the servicing of debt.

"It is highly unlikely that this round of interest rate cuts will continue this year," said Falconer.

"We should view this decision as signalling the end of eight months of interest rate cuts, which means it won't get better, and potential investors should no longer continue to defer their entry into the property market. We don't see the market getting any easier than it is today."

Market has been sluggish

The market has been sluggish for more than a year since it became evident that South Africa was also entering the global recession triggered by the US subprime crisis.

Buyers have not found sellers, sellers have been unable to obtain the bonds they did two years ago, and the banks have been fearful to extend credit given that the cause of the recession was related to property credit, and due to the lack of liquidity in the market.

"There are very positive signs that the worst is over, so any further procrastination would be unwise," added Falconer.

"We have noted that Standard Bank, for one, has relaxed its lending criteria, and at least one other bank is advancing 100 percent loans for low-end property."

Other positive signs, said Falconer, are:

• Globally the word is that the worst of the recession is over.
• Several US banks are reporting high levels of profitability.
• Albeit with government incentives, such as the Cash for Clunkers initiative, the automotive market is starting to turn, both in the US and Europe.
• Inflation is declining to just outside the Reserve Bank's target range.
• The oil price is relatively low, but volatile and likely to start climbing ahead of a northern hemisphere winter.
• The rand has been strengthening ahead of the MTN-Bharti deal, and the gold price has surged through $1000 an ounce.
• South Africa's balance of payments remains positive, with inflows sufficient to finance the deficit on the current account.
• There have been positive reports locally and abroad that the property market is beginning to move.
• A number of market commentators have reported significant economic recovery in a number of South African provinces.

The toxic debts behind the subprime crisis have yet to work their way through the system, so a number of economic commentators have predicted what is known as a "U-shaped bounce", where the recovery is short-lived as the economic fundamentals have not changed.

"However, whatever the individual indicators, we are confident the worst of the property market is over," said Falconer.

"If you continue to be uncertain or concerned, you could be missing out. It's time to get back into the market."

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