On 22nd August, 2013 i.e. on Thursday the property index was on the most worst situation as the index had fallen by 1.63% because of some issues in the local bond yields, which states strongly that the SA Reserve Bank may hike the interest rates before the end of the year.
Rob Towell- the Consilium Securities senior said, the increase in the interest rates due to bond yields will greatly affect the property sector. According to RMB, the Forward Rate Agreement market is now being priced with a chance of 80% increment by 50 basis points hike in the interest rates. The change can be seen after the Monetary Policy Committee’s meeting in November.
The local R186 bond has increased upto to 30% since the beginning of May, while the US treasury’s yield was yet a possibility.
However Fed (US Federal Reserve) was not completely sure about how they were going to perform further, but the general agreement states that the expected narrowing will be seen this year, which will create a pressure on the emerging market yields.
The shares of Growthpoint- SA’s largest property company also went to the ground from 1.72% to R22.80 when compared to Redefine- the next after the Growthpoint moving down to 2.02%, which was very close to its worst level since May 2012.
Apart from this Vukile Property Fund was seen to be dropped by biggest percentage drop in the sector by 3% to R14.55, Investec Property Fund by 2.74% to R14.20, Hyprop melted down by 2.18% to R68.50 and Fountainhead felled by 1.40% to R7.05.
The overall share index was found to be down by 0.39% at 42‚927.37 points at midday.
