Repo rate commentary – Impact of the MPC meeting on the residential property sector

On 18 September 2025, the South African Reserve Bank’s (SARB) Monetary Policy Committee announced a rate hold, keeping the prime lending and repo rates at 10.50% and 7%, respectively. Property experts share their views below.  

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Dr Andrew Golding, Pam Golding Property Group Chief Executive

Unchanged repo rate unlikely to stall housing market momentum.

With August’s CPI (Consumer Price Index) easing to 3.3%, down from 3.5% in July (2025), it is unfortunate that the Monetary Policy Committee (MPC) decided to leave the repo rate unchanged at its September (2025) meeting.

All things considered, were it not for the Reserve Bank’s focus on the lower end of the 3–6% inflation target band, local conditions appeared favourable for an additional rate cut. Economic activity remains subdued, the rand has been supported by a weaker dollar, while oil prices will hopefully stay contained.

Even though Q2 2025 GDP (Gross Domestic Product) surprised on the upside, the subsequent upward revision to GDP growth estimates for the year to around 1%, still lags the population growth rate of 1.3% – highlighting that the economy remains constrained in a cycle of sluggish growth.

Given these factors, we are hopeful that the latest decision represents only a temporary pause in South Africa’s interest rate easing cycle, with the prospect of further cuts either later in 2025 or during 2026.

Housing market recovery

Despite the pause in the local interest rate cycle, the recovery in the housing market continues to gather momentum, albeit modestly. National sales activity is showing slow but steady improvement, supported by the banking sector, which is offering attractively priced loans, elevated approval rates and reduced deposit requirements for home buyers.

Benefits for home buyers

While lower interest rates would certainly provide additional momentum, the housing market is already benefiting from subdued inflation, a series of petrol price cuts, and some interest rate relief, all of which help ease household debt burdens. This is encouraging the return of first-time buyers, in particular, to the housing market.

Positively, according to ooba Home Loans, the average national concession relative to prime during the year to August 2025 was -0.63%, compared with -0.55% in the same period last year, resulting in more attractive finance options for potential buyers. Although home loan pricing varies widely across regional markets, for the year to date it has improved to various degrees in all regions compared with 2024.

Furthermore, the average national deposit paid as a percentage of purchase price declined to 14.7% between January and August 2025, down from 15.4% a year earlier (source: ooba Home Loans). Deposit levels for both overall purchasers and first-time buyers are now close to those seen just prior to the pandemic, having steadily reduced from the post-pandemic highs of late 2023 and early 2024.

Currently, the recovery in house prices is more pronounced than the rebound in sales activity, which reflects an imbalance between demand and supply, particularly in the Western Cape, which has continued to attract strong buyer interest from across the country and externally  since the pandemic.

From a Pam Golding Properties perspective, we are experiencing sustained activity across all regions of the country and in all price bands, including the luxury market, reflecting a steady recovery in buyer confidence. In particular, high-demand areas and sought-after locations continue to enjoy buoyant levels of activity, driven by lifestyle appeal, ongoing semigration trends, and the availability of competitively priced finance. This momentum underscores the resilience of the market, even in the face of a subdued economy.

Chris Tyson – Tyson Properties CEO

Chris Tyson

The Reserve Bank’s decision to pause interest rate cuts today did not come as a surprise – so, remain resilient as interest rates hold steady.

This week, it emerged that the Consumer Price Index (CPI) decreased by 0,1% between July and August, with four of thirteen categories in the inflation basket (including food and non-alcoholic beverages which contribute to household spend) and household equipment and routine maintenance dipping. Economists remain hopeful that inflation will remain in the acceptable 3% to 6% band going forward.

However, this does not necessarily mean that households are finding it any easier to manage monthly expenses, he points out.

Sometimes statistics mask the daily grind and, despite indications of a slight uptick in retail activity, overall consumer demand remains low. Economic policy uncertainty, a vacillating rand and the beginning of the Madlanga Commission of Inquiry into alleged police corruption could feed ongoing uncertainty.

However, Tyson is a firm believer that South Africans are extremely resilient and, even if this pause is just the beginning of what many economists expect to be a prolonged halt in interest rate cuts, he says that property owners have every reason to be positive if they compare this September to September 2024.

The current cutting cycle has seen the South African Reserve Bank (SARB) MPC cut interest rates by a cumulative 125 basis points (1.25%) since September 2024.

Although acknowledging the relief that rate cuts offer to stressed households, Tyson continues to urge property owners to budget wisely and repay mortgages at an existing slightly higher level whenever possible in order to reduce the overall repayment period.

His advice to sellers to price properties wisely still stands. He also encourages investors to take advantage of the current buyers’ market to invest in income generating properties as the already thriving rental market is likely to continue its upward climb whilst economic uncertainty and low growth persist.

Overall, he recommends that homeowners continue to cultivate sound financial habits when managing their household budgets.

His tips to help South African homeowners remain economically resilient are:

1. Try to keep your repayments on loans at current levels if you can. That will enable you to pay off your home loan faster and become less vulnerable to future rates hikes.
2. Create or stick to a strict household budget that will enable you to control disposable income.
3. Review your insurance. Remove listed items such as laptops and phones that you are no longer using and ensure that car insurance is adjusted according to the age and resale value of your vehicle.
4. Maintain your home. Keep your property in good condition so you do not land up with bigger issues you need to pay to have repaired.
5. Create a passive income stream by leasing a cottage or create an AirBnB by converting an unused space on your property.

Greg Dart – A director at the High Street Auction Company

Greg Dart

Cautious optimism the game as interest rates hold steady.

The South African Reserve Bank’s decision to pause interest rate cuts today did not come as a surprise for property expert Greg Dart, a director at the High Street Auction Company.

This week’s revelation that the Consumer Price Index (CPI) decreased by 0,1% between July and August, with four of thirteen categories in the inflation basket and household equipment and routine maintenance dipping, sparked some optimism about an interest rate cut.

However, this was not to be and businesses continue to make adjustments to counter broader financial risk, Dart points out. In addition, the MPC continues to target CPI at a conservative 3% rather than the broader 3% to 6% that has prevailed up until now.

With GDP growth still lacklustre at 0.8% during the second quarter of this year, an expected spike in unemployment given the shutdown of major steel and tyre manufacturing industries and retrenchments at automotive manufacturers as well as low consumer demand and business confidence, many companies continue to free up liquidity through the sale of non-core assets.

Investors that are less dependent on interest rate fluctuations and who are looking to diversify their portfolios away from the stock market and more conventional investment vehicles that are still hypersensitive to ongoing global geopolitical tensions and disruptive tariffs, would do well to leverage the auction platform to pick out good investment opportunities, according to Dart.

He says that location is now more important than ever for investment, with key hubs such as the Western Cape and parts of KwaZulu-Natal showing early signs of recovery and representing good options.

This will position investors – especially those in the logistics and freight sectors and the broader industrial arena – to benefit should the much-anticipated trade normalisation between South Africa and the US emerge.

This week the Federal Reserve cut the key American interest rate by 0.25 percentage points for the first time this year. The South African government is continuing its attempts to normalise trade relationships with the Trump administration.

Jonathan Kohler, Landsdowne Property Group CEO

Jonathan Kohler

Residential property market enters a phase of cautious optimism as SARB holds rates steady

With the South African Reserve Bank holding the repo rate at 7.75%, the residential property market enters a phase of cautious optimism.

While affordability remains tight – particularly in metros like Cape Town and Johannesburg – steady rates offer a degree of predictability that buyers and developers can work with. Sectional title homes are expected to continue to lead the market, especially among first-time buyers and young professionals seeking secure, low-maintenance living.

A steady rate environment helps sustain this momentum by allowing home buyers and investors to lock in financing without fear of sudden hikes. However, lending remains stringent, and buyers are increasingly opting for smaller units in well-located suburbs like Claremont, Centurion, Bryanston and Durban North among them.

The rental market is likely to remain buoyant. As affordability constraints persist, many would-be buyers are choosing to lease, especially in urban nodes where demand for fibre-ready, secure units is outpacing supply. Developers are responding with more compact, sectional title offerings that align with buyer budgets and lifestyle needs.

Ultimately, while the steady rate may not ignite a buying frenzy, it reinforces market stability. For investors and homeowners alike, the message is clear: plan strategically, focus on fundamentals, and leverage the predictability of SARB’s disciplined stance.

Rhys Dyer, ooba Group CEO

SARB Holds Rates Steady as Market Recovery Gathers Pace

The South African Reserve Bank (SARB) announced a rate hold today, keeping the prime lending and repo rates at 10.50% and 7%, respectively.  This is disappointing given that inflation remains well within the target range and for the SA consumer who is still under significant pressure.

The news follows a quick succession of interest rate cuts from September 2024 to July 2025, with several local and global economic developments driving the decision.

Speaking to these developments, Rhys Dyer, CEO of the ooba Group says: “Today’s announcement should be viewed as a pause or recalibration rather than the end of the rate cutting cycle. It gives the SARB time to balance domestic inflation risks with an increasingly supportive global backdrop.”

Locally, Dyer shares that the SARB remains committed to its recently signalled shift toward targeting the lower end of the 3 – 6% inflation band. “Anchoring expectations near 3% will be essential as headline inflation rises, driven by higher food costs and base effects, which outweigh modest petrol price cuts (only 4c per litre in September),” he says.

Key Statistics Highlighting Gradual Market Recovery

Despite the rate hold, Dyer shares that ooba Home Loans data points to signs of steady recovery following five interest rate cuts. He highlights some of the key developments as follows:

1. Improved affordability aids higher purchase prices

From January – August 2025, the average overall purchase price recorded by ooba Home Loans came in at R1.68 million, marking a 3.4% increase year-on-year. Over the same period, the average purchase price paid by first-time homebuyers increased by 4.4% to R1.24 million. “These statistics underpin improved affordability and financial wellbeing amongst consumers.”

Dyer also notes that while the Free State may be home to the lowest purchase price in the country (at R1.16 million Jan – Aug ‘25), it is in fact the only region registering double digit growth in the average purchase price paid, at 10.7% (Jan- Aug ‘25).

1. Gauteng turns a corner

He shares that while there has been an uptick in activity across all major provinces, the uplift in Gauteng is most notable.

“It’s a known fact that the recovery of the national housing market has been driven by the Western Cape at a regional level and by Cape Town at a metro level, but the metro housing markets in Gauteng have also gathered momentum and are now major contributors to the national housing market recovery,” says Dyer, adding that this is particularly evident in the prices paid by first-time homebuyers.

“The recovery in first-time homebuyer house price inflation (HPI) in Tshwane became more pronounced this year, with the average purchase price rising by 11.2% from Jan – Aug ‘25. In Johannesburg, we have also noted signs of recovery in recent months, with purchase prices up by 11.7% in Aug ‘25 from year-earlier levels.”

1. First-time homebuyer demand trends upwards

As a known interest rate sensitive demographic, the industry has long awaited a rebound in first-time homebuyer demand, which, according to Dyer has become more consistent in 2025. “August ‘25’s figures showed that 47.7% of total applicants were first time homebuyers, close to recent highs, with underlying signs of recovery still intact.”

In addition, he points to accelerated lending support from the country’s major banks. “Interestingly, in Q2 ’25, our data shows that 59% of first-time homebuyers were able to purchase a home without a deposit (100% home loan) and 10.5% secured financing that also covered their transfer and bond registration costs.”

Despite the support, it is also encouraging to see the average first-time homebuyer deposit sitting just above the recommended 10% mark, at 10.4% in Q2 ‘25 – a particularly commendable feat in a tough economic climate.

1. Cape Town remains resilient in driving activity

According to Lightstone, Cape Town continued to outperform other major metro housing markets by a wide margin, with purchase prices rising by 7.4% in July ‘25. This was followed by eThekwini (3.3%) and Tshwane (3.0%).

In addition, the banks continue to back homebuyers in this province, offering a generous interest rate discount of prime less 0.87% in Aug ’25, compared to 0.64% nationally, further fuelling activity.

1. Savvy buyers put down big deposits

Looking to the average deposits across the regions, Dyer points to a robust national figure of 14.7% for H1 ‘25. “As the average purchase price rises, so too do deposits – an encouraging sign that homebuyers are building stronger equity positions from the outset.”

Regionally, the Western Cape leads with an average deposit of 20.3% followed by the Eastern Cape at 15.4%, KwaZulu-Natal at 14.3%, Limpopo at 14.1% and Johannesburg at 13.4%.

Looking ahead, Dyer expects further rate cut relief in November 2025 or early next year. He emphasises that the stability of these cuts play a crucial role in fostering a favourable borrowing environment for both homebuyers and homeowners. “This not only supports confident investment but also helps to sustain the upward trajectory that we are currently on.”

Samuel Seeff – Seeff Property Group Chairman

Samuel Seeff

Unchanged interest rate a huge missed opportunity for the economy.

The decision by the Reserve Bank to retain the repo rate unchanged at 7.00% (prime rate at 10.50%) is a huge missed opportunity for the economy and property market, says Samuel Seeff, chairman of the Seeff Property Group.

This is particularly disappointing given that the US Fed announced a rate cut of 25-bps yesterday. Seeff says just based on the currently favourable economic fundamentals there was ample room for the Bank to provide another rate cut. Inflation has moderated to 3.3%, comfortably near the Bank’s lower target range, and the Rand has remained stable at around the R17.50/USD range despite the unresolved US trade challenges.

There was adequate reason to provide at least a 25-basis point cut, and we believe further rate cuts are needed to take the rate back to the pre-pandemic level. Seeff says while recent rate cuts have brought relief, the effect on the broader economy has been negligible, evident in the low economic growth rate of just 0.8%. He notes that despite inflation being lower than it was before the pandemic, the interest rate remains higher. This must be addressed to stimulate growth and create much-needed jobs.

Commenting on the property market, he says market activity has improved with many Seeff branches reporting improved sales, and depleting stock levels. Buyers are clearly taking advantage of the interest rate savings, but Seeff says overall transaction volumes are still somewhat below the pre-pandemic levels in many areas.

Market conditions in most areas remain favourable for buyers with the interest rate lower compared to mid-2024. Depleting stock levels now also provide impetus for more sellers to come into the market, especially since prices are up.

FNB for example reported that national house price growth continues the path to recovery as it had strengthened to 4.5% by August. This is more than double the 1.2% growth at the start of the year, and now outpaces inflation.

Seeff says, however, that economic growth and job creation must be a priority right now. The property sector therefore continues to call on the Reserve Bank to take more bold action, especially when the opportunity presents for a rate cut.