South Africa Unexpectedly Cuts Interest Rate to 7%

By Nasreen Seria and Ron Derby

Aug. 13 (Bloomberg) -- South Africa’s central bank unexpectedly cut its benchmark interest rate by half a percentage point, the sixth reduction since December, to curtail the economy’s first recession in 17 years.

The repurchase rate was lowered to 7 percent, Governor Tito Mboweni said in a televised speech from Pretoria today. Only three of 27 economists surveyed by Bloomberg predicted today’s decision, while the rest expected the rate to be left unchanged.

The Reserve Bank resumed cutting its benchmark rate, after keeping it unchanged at the last Monetary Policy Committee meeting in June, as manufacturing data showed the economy may have contracted for a third consecutive quarter in the three months through June. The bank also has room to lower interest rates after the inflation rate fell to a 22-month low of 6.9 percent in June.

“This recession is turning out to be a little deeper and a little longer than we had expected,” said Colen Garrow, an economist at Brait SA in Johannesburg who forecast today’s rate cut. “Extraordinary times call for extraordinary measures. Inflation is going to take care of itself.”

The rand was at 8.0688 against the dollar as of 3:43 p.m. in Johannesburg from 7.9840 before Mboweni began speaking. The yield on the R157 government bond, due 2010, fell 8 basis points, or 0.08 percentage point, to 8.29 percent.

Recession

Manufacturing, which accounts for 15 percent of the economy, plunged an annual 17 percent in June, the same decline as the previous month, the statistics office said on Aug. 11. Retail sales fell for a fifth consecutive month in June, dropping 6.7 percent from a year ago, Statistics South Africa said yesterday.

“It is likely that the domestic economy contracted in the second quarter of this year,” Mboweni said. “The domestic economy remains constrained by weak global and domestic demand.”

Gross domestic product fell an annualized 6.4 percent in the second quarter, the biggest drop in almost 25 years. The statistics office will publish second-quarter GDP data on Aug. 18.

Mboweni has faced growing pressure from labor unions to continue cutting interest rates to help curtail the recession and ease job losses. The Congress of South African Trade Unions, the country’s biggest labor federation, called for a 2 percentage point rate cut today.

Inflation Outlook

Most economists expected the central bank to keep the benchmark interest rate unchanged as wage demands of as much as 15 percent threatened to boost inflation. Eskom Holdings Ltd., the state-owned power utility that increased electricity tariffs by 31 percent this year, agreed on Aug. 8 to increase employees’ pay by 10.5 percent.

That has been partly offset by the rand’s 32 percent surge against the dollar since March, helping to ease import costs.

Inflation will probably ease into the target by the second quarter next year and remain there until the end of 2011, Mboweni said. The main risks to inflation are from “cost-push pressures” such as rising oil and electricity costs, he added.

“Notwithstanding upside cost pressures, the adverse economic conditions appear to tilt the balance of risks to the inflation outlook towards the downside over the medium term,” the governor said.

Mboweni, 50, will leave the Reserve Bank in November after more than a decade as governor. He will be replaced by Gill Marcus, a former deputy central bank governor and most recently chairwoman of Absa Group Ltd., the country’s biggest retail bank.

To contact the reporters on this story: Nasreen Seria in Johannesburg nseria@bloomberg.net; Ron Derby in Johannesburg at rderby1@bloomberg.net
Last Updated: August 13, 2009 09:46 EDT

For information on South African property go to www.ipsinvest.com

IPS moves London office - more convenient and better technology!

International Property Solutions (IPS), the business started its life in London, helping expats buy South African property back home over 6 years ago. The business model was to provide the same experience buying property as if you were back in South Africa and so our offices had everything you needed to enjoy that experience!

When we chose the location, it was a selfish decision. Scott Picken, IPS CEO was living in Wimbledon and did not see the point of commuting, especially when 60 000 South Africans lived in Wimbledon alone. Many people said we needed to be in the city to allow people who live in other parts of London to have easy access to our services. Scott says, "The thought of the commute into town every day just seemed too much!"

However Scott moved back to South Africa at the end of 2007 and there has been a stronger and stronger reason to move to the centre of town for this convince to clients. Also at their last event in May 2009, which was hosted from the Wimbledon Office - there were just too many people and it didn’t work.

Therefore IPS has moved their offices to Green Park (central London). The new offices provide everything we had in Wimbledon, but also allow us to upscale when we need to provide for bigger events and most importantly from a technology point of view. Scott Picken says, "These new premises provide us with exactly what we are looking for to ensure we can service our currents clients in London and the many we will assist in the future."

IPS CEO Update | Aug 09 | Knowledge is the only way to manage Uncertainty!

2009 continues to be a unbelievable year. Only yesterday Mark Mobius, top banker in the USA said the market could loose 30% on the highs of the last 3 months of the stock market and this is amongst all the positive news which has been coming through. The only thing we can be certain of is “uncertainty” and as Ian Fife said, the only way to handle this uncertainty is through KNOWLEDGE. IPS therefore continues its drive for education, providing live presentations on “How to buy a home?”, “How to become a property investor?” and then also Webinars on the South African, Australian and UK property market. We have also recently launched a website www.HowToBuyaHome.co.za which provides you with everything you need to know about buying property and it is also in Zulu. The Property Charter is determined to enable property ownership through all the people of South Africa and this is our aim to provide a solution. Therefore we believe that through this collective education we can help our clients make educated and informed decisions about their investments and their future!

This week we also proved the success of working together and using technology with the launch of Kelvin Manor, our latest investment in Sandton, where we helped 58 people invest in 8 days. Who said the market had cooled off? Come down and see what all the excitement is about.

Finally in the UK and Australia there have recently been sleep outs (people sleeping at a site the night before) to ensure they were able to purchase the next day when the property launched. Come to one of our Webinars and find out why? Click here to view.

Here’s to an exciting remainder of the year!

Go to www.ipsinvest.com for more information.

Branson gives IPS the thumbs up!

At a recent Leadership Summit, Brad Allan and Scott Picken from IPS, met some of the top personalities both locally and globally. This is what they had to say:

• Sir Richard Branson – Scott asked Sir Richard how he leads and gets the best out of his people with offices around the world, as geography is such a challenge. “He said, firstly it is easier as he owns an airline, but most importantly when he sees his staff it is very important to have fun. Then once the company gets to 30 odd people it is important to get a MD who is a people person and who doesn’t know how to criticize.

• Malcolm Gladwell (Author of tipping point) – there are 4 main things which determine success.
o Put in the hard work and the success will come – law of 10 000 hours, you become successful after 10 000 hours of practice.
o Compensation – learning through failure.
o After time people learn what they are good at – trial and error.
o Leadership – need to give team and people the time and the space to grow, fail and learn. This requires faith from the leaders.

• Shaun Tomson (Famous Surfer)– he learnt life from surfing, but his two main messages is that leadership is to inspire and that commitment takes away your fear!

• Adrian Gore (Started Discovery) – said there were 7 key attributes to leadership
o Positive & Optimism – you always make better decisions when you positive.
o Set dreams and Goals – you have to know where you going.
o Sense of urgency, your time is limited – now is the time to achieve greatness.
o Never stop learning – always learning stops aging and makes the most of life.
o Persistency – key to success.
o Power of innovation – always be looking for the better way to do it.
o Integrity and Honesty – foundation for long term success.

• Wendy Luhabe (SA top female entrepreneur) – to succeed in the 21st century you need to act within the interest of humanity.

• Ronnie Apteker (started Internet Solutions) – basically persuasion sits at the centre of life and also he always invests in people rather than ideas.

• Matthews Phosa (ANC Secretary) – was very positive about South Africa’s future and all citizens. He joked about Michael Jackson and how they are striving for, “it doesn’t matter if you are black or white.” A future to encompass all citizens, in a strong, safe and secure South Africa with a multitude of opportunities.”

Who said we would not be ready for 2010?

I lived in London for 9 years and so many people used to tell me South Africa would never be ready for 2010! It used to anoy me so much as I knew we would 'make a plan'. Even with the strikes on at the moment (and to be honest they deserve the pay rises) I heard one construction worker say he would even work Sundays to make sure it was finished.

2010 is the pride of South Africa and we will not only make it happen - it is going to be fantastic!

Take a look at this picture of King Shaka airport in Durban.



Win 2 tickets to the World Cup 2010 Final - go to www.ipsinvest.com

UK Rental Index - June 09

© 2009 FindaProperty.com

In June 2009, rents increased for the first time since August 2008, demonstrating further signs of recovery in the UK rental market.

Average asking rents have increased by 0.5% month-on-month to £823 pcm, but are still 5.3% lower than June 2008 when rents stood at £869 pcm.

Supply levels of rental property fell by 0.4% in June 2009.

This is the first time that supply has fallen in 18 months.

The average time a property is on the market now stands at 63 days, which is still 14 days longer than properties were available for in June 2008.

Asking rents in London remain volatile, declining 0.3% in June 2009 after a month-on-month increase of 0.4% in May 2009. The average rent in the Capital now stands at £1,625 pcm.

The majority of regions continue to suffer from both month-on-month and year-on-year declines in asking rents. However, the South East continued to show signs of recovery with asking rents rising by 0.2% in June 2009.

UK rental yield remained stable at 4.56% in June 2009, with average yields now standing at 4.33% for UK houses and 5.24% for UK flats.

Click here for the whole article.


http://www.ipsinvest.com/Controls/File/DownloadDocument.aspx?id=18&sec=CountryDocuments

June - Nationwide UK Property Index - Growth 0.9%

House price rises continued in June

• House prices rose by 0.9% in June
• Three month rate of change turns positive for first time since December 2007
• Low supply supporting prices for now, but a sustained recovery still faces risks

Commenting on the figures Martin Gahbauer, Nationwide's Chief Economist, said:

“The price of a typical house rose by a seasonally adjusted 0.9% in June, building upon the improving trend seen over the last several months. At £156,442, the average house price across the UK was still 9.3% lower than a year ago, but this marks the first time since July 2008 that the year-on-year fall has been in single digits. The three month on three month rate of change – a smoother indicator of the short-term price trend – turned positive for the first time since December 2007 to stand at 0.9%, up from -0.4% in May. If the pattern of price movements seen in the first half of the year is repeated over the second half, then prices could show only a small single digit fall for 2009 as a whole. This would represent a stark shift from trends seen at the turn of the year, when most indicators were pointing to a repeat of the large declines seen in 2008.

Prices have stabilised despite very low house purchase activity

“House prices have now risen in three of the last four months, suggesting that the improvement that began to show up in March represents more than just statistical noise. What is unusual about the recent trend reversal, however, is that it has taken place against a background of transactions activity that is still very low by historical standards. Although it has risen from the all-time record low reached in November 2008, the industry-wide number of mortgages approved for house purchases is still 55% below its long-run average and 33% below the trough reached in the 1990s downturn. Normally, such a low level of house purchases would be associated with falling house prices. Alongside the low level of mortgage approvals, however, there continues to be a relentless drop in the stock of property available for sale, as potential sellers and builders have responded to depressed demand conditions by reducing the supply of property coming onto the market. As a result, prices have been able to stabilise even in the face of very low demand.

What the rest - click here.


http://www.ipsinvest.com/Controls/File/DownloadDocument.aspx?id=17&sec=CountryDocuments