Commentary on the 30 January 2025 repo rate cut. We hear from the Pam Golding Property group, ooba Group, Tyson Properties, Lew Geffen Sotheby’s International Realty, Rawson Property Group, High Street Auctions, Seeff Property Group and Landsdowne Property Group. For more repo rate insights from the experts see Here.
WORDS: SUPPLIED :: PHOTO: PEXELS
Pam Golding Property group – Dr Andrew Golding – Comments on the repo rate reduction – Very encouraging news for home buyers
“Today’s announcement by the Monetary Policy Committee of a further 25bps repo rate cut, bringing the prime rate to 11%, is very encouraging news for aspirant home buyers and those with existing mortgages, particularly as the outlook for interest rate relief has shifted significantly during recent weeks.
This is the third consecutive interest rate decrease, following reductions of 25bps at both the September and November 2024 MPC meetings, bringing the total interest rate relief in this current downward cycle to 75bps.
Although this month’s (January 2025) rate cut was widely anticipated, the outlook for interest rates for the remainder of the year is far less clear with opinions ranging from no further interest rate relief to one single cut of 25bps. However, the timing of any further rate cut is also debated with some commentators suggesting March 2025 and others later in the year.
This would make the current interest rate-cutting cycle unusually shallow. This is largely a reflection of the heightened uncertainty in the current global economy amidst concerns of a resurgence in inflationary pressures which is making many central banks – and the SA Reserve Bank in particular -cautious.
The stream of executive orders from the US White House is also creating uncertainty, prompting a reassessment of the likely scope for further interest rate cuts in the United States, which has shifted from initial expectations of three 25bps rate cuts to a single cut later this year. Fewer US interest rate cuts leave less space for local interest rate relief, and any further rate cuts will be dependent on developments both globally and locally.
Notwithstanding this potential uncertainty sentiment has improved, in general, with the previous two repo rate reductions of a cumulative 50bps in 2024 already creating a ripple effect across the residential property market – increasing uptake, particularly in the lower to middle sectors of the market, while also boosting confidence and activity in the luxury market.
Sales activity nationally is experiencing an uptick, with increased activity among first-time buyers – the most sensitive to interest rates – evident in the marketplace. According to ooba Home Loans, there is clear evidence of a recovery in first-time buyer demand during H2 2024, with notably strong growth in demand in Mpumalanga, Johannesburg and Gauteng South and East. The banks continue to support the housing market, with the average (weighted) concession relative to prime improving across all regional markets in 2024.
The demand for investment or buy-to-let properties surged to 15.1% of applications in December 2024, according to ooba, with investment demand averaging 12.6% of applications last year – up from 10% in 2023. While investment demand rose in most regions during the course of last year, this remains concentrated in the Western Cape, with 38.8% of all applications in Dec 2024 reflecting this demand.
From a Pam Golding Properties perspective, the increased activity in the residential property market is borne out by the fact that November and December 2024 were busy months, with our group sales well ahead of transactions concluded in Nov/Dec 2023.
For the local housing market, the recovery in house prices continues to gather momentum and become more broad-based. While the Western Cape remains the primary engine of the recovery, having consistently outperformed the national market during the past five years, the rebound in house prices has spread to most other regions as pressure on household finances eases.
According to the Pam Golding Residential Property Index, national house price inflation has risen steadily from below 2% in late 2023 to +5.1% in December 2024.”
Rhys Dyer – ooba Group – How the Latest Rate Cut Will Shape Homebuying in 2025
Today’s announcement of a further 25 basis point rate reduction marks another milestone for the residential property sector, lowering the repo and prime lending rates to 7.50% and 11.0%, respectively.
This news concludes the third rate cut in a period of less than six months, with the potential for further rate cuts anticipated during the first half of 2025.
Rhys Dyer, CEO of the ooba Group, welcomed the news – and the potential of a cumulative 100 basis points rate cut before the end of 2025. “Today’s announcement by the South African Reserve Bank (SARB), coupled with the potential for further relief, will aid growing momentum in South Africa’s residential property sector,” says Dyer, pointing to healthy growth in home loan demand.
He adds that with economic activity still at subdued levels and headline inflation at just 3.0% in December last year, one can definitely make a strong case for further interest rate relief locally, but that the global economic outlook may dictate some changes in the months to come.
“The global economic and inflation outlook is rather uncertain, and the SARB may be reluctant to cut interest rates too hastily and run the risk of any reversal in the progress achieved thus far in containing price pressures.”
Last Month’s Key Indicators Underpin Improved Outlook, Supported by Favourable Lending
In December 2024, following two interest rate cuts, ooba Home Loan’s statistics showed an increase in the average purchase price paid for property in the month to R1.67 million – a healthy 6.5% year-on-year increase.
“The average purchase paid by first-time homebuyers also rose to R1.26 million over the same period, marking a 6.7% increase,” continues Dyer.
Motivated by attractive interest rates, coupled with favourable bank lending conditions, Dyer says that national demand for buy-to-let properties surged to a record 15.1% in December 2024, reaching a new record level, up from a previous high of 14.8% in December 2023.
“Last month’s buy-to-let figures were almost entirely attributable to a 10.8 percentage point increase in demand in the Western Cape, with 38.8% of all applications received attributed to buy-to-let properties.”
First-time homebuyers benefited from the highest levels of loan-to-value (LTV) ratios seen in recent years at 90.4% in Q4’24 – compared to 88.4% a year ago.
“Our data shows that the banks continue to support homebuyers with 100% loans, despite the climate,” says Dyer.
Rate Cuts see Gauteng’s market starting to turn the corner
As the largest housing market in the country, the Gauteng region has been privy to excess supply over demand and weak house price inflation (HPI) in recent years.
After 15 long months of falling prices from year earlier levels, June 2024 saw the turning of a corner in the Johannesburg housing market. “Q4 ‘24 saw this trend gaining slightly more momentum, with the purchase price paid in this region averaging R1.69 million, 1.8% ahead of Q3 ‘24’s average of R1.66 million. This is hopefully a sign of a turning of the corner for the Gauteng market as we move into 2025.”
Looking Forward
Looking ahead, Dyer believes that it is currently a great time to enter the housing market. “Over the next year we anticipate double-digit growth in homebuying activity and transactions, underpinned by interest rate cuts and improved investor confidence. With many homebuyers looking to enter the market, our best advice is to seek out a trusted home loan comparison service to increase your chances of receiving home loan approval – and at the best possible rate.”
Tyson Properties – Interest rate cut comment
Chris Tyson, CEO of national real estate agency, Tyson Properties, today welcomed another 25 basis point cut by the South African Reserve Bank (SARB) Monetary Policy Committee (MPC) after its first meeting for the year.
Confident that further rates cuts are still to follow despite a slight uptick in the inflation rate to 3% in December (which remains below the SARB’s benchmark 4.5%) and global economic policy uncertainty in the wake of US President Donald Trump’s re-election, Tyson is confident that this latest cut is good news for the property market.
Interest rate cuts by the SARB are beginning to add up to some meaningful relief for South African home owners. As a result, Tyson Properties is positioning itself for a more buoyant market during 2025 and expects a recovery in key regions such as Gauteng and KwaZulu-Natal, while the Cape property market continues to perform.
Although Tyson believes that the SARB will continue along the ultra-cautious trajectory that saw repeated decisions to maintain the repo rate unchanged at a 15-year high of 8.25% until September 2024, he believes there is a strong chance that the interest rate might ultimately drop to around 7%. This will give both buyers and sellers waiting out the 2024 interest rate plateau more confidence to enter the property market, he says.
Over the long-term – and should the interest rate decline continue as expected – Tyson envisages that the residential property market will move from a buyer’s market to a normal market within two years.
Even if the SARB begins to hold rates once more at a lower point, he says that this should provide the property market with some stability and predictability which would entice those contemplating longer-term investments to look to buying properties.
Yael Geffen – Repo rate & Eskom tariff reaction – property sector
In response to today’s announcements of a 0.25% basis point cut to the prime lending rate and Eskom’s tariff increase for the year of 12.7%, Lew Geffen Sotheby’s International Realty CEO Yael Geffen says the government is “giving with one hand and taking with the other”.
“The net effect is negative for consumers because the significant increase in electricity costs outweigh the minimal benefit of the interest rate decrease.
“Make no mistake; business as a whole, particularly the property industry, is grateful for any cut to the repo rate, but today’s cut is too small to mitigate the electricity increase – which isn’t a luxury spend for households.”
Geffen says examining the interest rate cut shows that:
Impact on Borrowing Costs: Even though this is the MPC’s third consecutive 0.25-point cut and will reduce the cost of borrowing in terms of bond repayments, personal loans and credit cards, it’s still small and unlikely to have a noticeable impact on most consumers.
Impact on Savings: Lower interest rates mean reduced returns on savings accounts and other interest-bearing assets. Again, a 0.25 basis point change is negligible.
Overall Effect: The interest rate decrease is so minimal that it is unlikely to significantly affect consumer behavior or financial well-being.
But with regards Eskom’s tariff increase from April:
Impact on Household Budgets: A 12.7% increase in electricity costs is substantial and will directly raise utility bills for households. This could strain budgets, especially for low- and middle-income families who spend a larger proportion of their income on essential utilities.
Impact on Businesses: Higher electricity costs may lead to increased operating expenses for businesses, which will be passed on to consumers in the form of higher prices for goods and services.
Inflationary Pressure: Rising energy costs contribute to broader inflationary pressures, almost invariably leading to higher prices across the economy.
“In a nutshell, the interest rate decrease is too small to offset the significant increase in electricity costs and consumers are going to experience a net financial burden, particularly those who are more sensitive to changes in utility prices.”
Geffen says the other massive concern for the private sector is the bigger threat the economy potentially faces this year, which is sweeping changes to US foreign policies under the Donald Trump administration.
“South Africa isn’t exactly flavour of the day, month, year or even decade as far as this Republication-led government is concerned, and with the aggressively fronted ‘America First’ policy position, our country is particularly vulnerable.
“I hope to so see this addressed significantly in both the State of the Nation Address and the Budget speech as parliament reopens. If we don’t have a plan to address this diplomatic rift, South Africa’s economy could tank, regardless of any internal strides we’ve been making.”
Rawson Property Group, David Jacobs and Leonard Kondowe – Rate cut relief: How the property market stands to gain in 2025
The South African Reserve Bank (SARB) has announced yet another 25-basis-point cut to the repo rate – the third adjustment in just over four months. This brings the prime lending rate down to 11%, continuing a recent downward trend aimed at easing financial pressure on consumers.
For homeowners and prospective buyers, this is fantastic news. Experts from the Rawson Property Group, David Jacobs and Leonard Kondowe, share insights on how this development will impact the market in the short to medium term.
A sustained trend of relief
This latest cut follows two rate reductions in late 2024:
September 2024: The SARB reduced the prime lending rate by 25 basis points to 11.5% – the first rate cut in over four years.
November 2024: Another 25-basis-point cut brought the rate down further to 11.25%.
David Jacobs, Regional Sales Manager for the Rawson Property Group, believes these cuts are a turning point for the South African property market. “The consistent decrease in rates is a strong signal of SARB’s confidence in the economy’s ability to maintain lower inflation,” he says. “For the property market, this trend is unlocking affordability and creating momentum, especially among first-time buyers.”
Jacobs explains that the downward trend in rates is vital for market confidence.
“The market was stabilising after the post-COVID boom of 2022 and 2023. These rate cuts give us the push needed to stimulate fresh buyer interest, particularly in segments like the mid-market and first-time buyers.”
Immediate impact on buyers and investors
Lower interest rates directly translate to reduced bond repayments, which makes buying a home more accessible for many South Africans. Leonard Kondowe, National Manager for Rawson Finance, highlights how this environment benefits both new buyers and existing homeowners.
“Lower repayments reduce the income threshold needed to qualify for a home loan, which is a significant boost for first-time buyers,” Kondowe explains. “It also makes homeownership a more attractive option for renters who’ve been hesitant to take the leap. For existing homeowners, this is a perfect time to consider paying down debt faster or refinancing to take advantage of the lower rates.”
He advises prospective buyers to capitalise on this favourable climate. “While rates are trending down, saving for a deposit and securing prequalification remain key steps. A deposit not only improves your chances of bond approval but can also secure you a better interest rate, resulting in significant long-term savings.”
Market expectations for 2025
What’s next for the property market? Jacobs remains optimistic about 2025.
“It’s early in the year, but the signs are positive. While we can’t expect the explosive growth seen in 2022 and 2023, the current stability is healthy for the market. Buyers have more negotiating power, and banks are showing increased willingness to lend, especially to those without large deposits.”
He also believes that the interest rate environment could lead to renewed interest in long-term property investments.
“This trend makes it an ideal time for investors to re-enter the market. As affordability improves, demand will naturally increase, which could lead to stronger growth in the medium term.”
Strategic advice for buyers and sellers
Jacobs recommends that buyers act now to take advantage of the favourable conditions.
“Start by working with a trusted real estate agent who knows your area well. Pricing is competitive, and properties offering good value will be snapped up quickly.” For sellers, realistic pricing remains key.
“The market is stable, but buyers are savvy,” Jacobs says. “Setting a fair asking price is critical to attracting interest and securing a sale in this environment.”
Looking ahead
The SARB’s consistent rate cuts are creating a more accessible and sustainable property market. For buyers, this is the perfect time to step onto the property ladder or upgrade to their dream home. For existing homeowners, it’s an opportunity to reduce debt and strengthen financial stability.
Greg Dart – High Street Auctions statement on SARB interest rate cut
South Africa’s third consecutive interest rate cut is welcome news for the property sector. Although the prudent easing does not go far enough yet to ease the rising cost of living, it supports rising confidence that South African growth is on an upwards trend, buoyed by optimism around the Government of National Unity (GNU).
With interest rates rising by less than expected (3% year-on-year in December), market commentators had widely expected a 25-basis point interest rate cut this Thursday. With further cuts expected later in the year – market forecasts suggest further repo rate cuts of 0.25% to 0.5% for 2025 – the property sector could expect the final rate to settle between 7.25% and 7.5%. We will just need to remain wary of potential external risks, such as the U.S. trade policies and their impact on the rand.
For residential and commercial property in the country, these repo rate cuts will encourage more buyers to invest in South Africa.
Lower interest rates will help make home loans more affordable, potentially encouraging more buyers to enter the market. This increased demand may lead to a boost in property sales and could stimulate price growth in certain areas. However, the extent of this impact will depend on overall economic conditions and consumer confidence.
For the commercial property sector, lower interest rates can ease some financial pressure on businesses by reducing the cost of financing, while supporting increased investment and the sector’s recovery. However, the overall impact will depend on broader economic factors and the specific dynamics of the commercial property market.
High Street Auctions is cautiously optimistic that South Africa will see further interest rate relief over the medium term, despite recent reports around friction in the GNU, a slowdown in global growth and rising inflation in major economies.
Samuel Seef – Rate cut welcomed, but it should have been 50bps
While the 25bps interest rate cut by the Reserve Bank, taking the repo rate to 7.50% (from 7.75%), and the prime rate to 11% (from 11.25%), is welcome news for the economy and property market, Samuel Seeff, chairman of the Seeff Property Group says it’s simply not enough.
A 50bps cut would have been far more meaningful, and he says there was adequate support for the Reserve Bank to counter the economic stagnation and unemployment risks with a more robust cut. The country can no longer afford what is effectively the highest real interest rate in the world (differential between the interest rate and inflation) while the economy is limping along, barely growing, and unemployment is spiking.
Seeff says the lack of growth and unemployment is a far greater risk than inflation. Given that GDP growth and employment is the most critical element right now, it seems out of step for the Bank to persist with the interest rate policy aimed at containing inflation between 3% to 6% when inflation is in any event at the bottom of the target range.
Our view is that the Bank must prioritise GDP growth and reduced unemployment over exchange rate concerns. GDP growth and increased employment cannot be achieved with high interest rates. Only bolder rate cuts can provide the necessary economic stimulus, and there is historic precedents for the Bank to step in such as during the Covid-pandemic period for example.
Seeff says while there may be a trade-off on the exchange rate and concern about the impact on investment, a growing economy may well provide adequate counter-balance to this, and in fact encourage more investment. We could then potentially see the currency get stronger.
Seeff says the rate cuts last year provided some impetus for the property market with sales volumes increasing towards the latter part of the year. While this rate cut provides a further boost, he says more interest rate relief is needed to get the market back to the volumes of two years’ ago, and the resulting economic and tax boost that this can provide.
Nonetheless, it is a good time for buyers to get into the market and find good value, especially in Gauteng and inland provinces where stock levels are still high. If the economy remains stable, and we start seeing some growth, then on the whole, Seeff believes the property market should perform considerably better compared to last year.
Areas operating from a low base such as Gauteng could see good growth with increased sales volumes. Once stock levels start coming down, prices can then finally start rising more meaningfully.
Seeff believes the Western Cape, and most coastal areas which performed better last year compared to the inland areas will likely continue its good performance. Many areas in the Cape especially are already seeing low stock levels, and prices could again rise at inflation-topping levels.
As a result of the 25bps rate cut, mortgage repayments will reduce by:
R750 000 bond – from R7 869 to R7,741– thus saving R128
R900 000 bond – from R9 443 to R9,290 – thus saving R153
R1 000 000 bond – from R10 493 to R10,322 – thus saving R171
R1 500 000 bond – from R15 739 to R15,483 – thus saving R256
R2 000 000 bond – from R20 985 to R20,644 – thus saving R341
R2 500 000 bond – from R26 231 to R25,805 – thus saving R426
R3 000 000 bond – from R31,478 to R30,966 – thus saving R512
R5 000 000 bond – from R52,463 to R51,609 – thus saving R854
(Based on a 20-year repayment period at the prime rate)
Landsdowne Property Group (“Landsdowne” or “the Group”), one of South Africa’s largest residential real estate managers and estate agencies, has welcomed the 25 basis point interest rate cut, viewing it as a significant positive shift in market sentiment for the property market and especially the Johannesburg market which needs rejuvenation.
Landsdowne Property Group – Jonathan Kohler, Founder and CEO comments:
Interest rate cut is a significant sentiment shift for the property market especially in Johannesburg
“The 25 basis point interest rate cut is a positive step for the property market, particularly in Johannesburg, where lower rates unlock significant value. The cumulative 75 basis point reduction, which amounts to three quarters of a percent is a meaningful shift. Not only does this improve market sentiment, but it also enhances affordability, potentially sparking an uptick in buying activity.
“Each interest rate cut improves perceptions of the market and increases people’s willingness to purchase property. These reductions are exactly what Johannesburg needs to see a return of market activity.”
Kohler said now is an ideal time to buy property. When the Reserve Bank of South Africa (SARB) began raising interest rates, many adopted a ‘wait-and-see’ approach, hoping for signs of recovery in the Johannesburg property market before making a purchase.
However, Kohler advises that those who have been waiting to buy in Johannesburg should act now. Delaying too long could mean missing the opportunity as the market picks up and begins to recover. As the market strengthens, buyers may face higher prices but will benefit from increased activity.
“The rate cut is particularly significant for first-time buyers who have been weighing the cost of renting against bond repayments for owning property. With interest rates continuing to fall, rental prices are becoming increasingly comparable to bond payments, making ownership a more appealing option.”
Kohler said this trend is particularly noticeable with one-bedroom or studio apartments, where lower levies, rates, and taxes contribute to a shift from a renters’ market to a buyers’ market. As interest rates continue to decrease, their affordability improves and they will find better value in Johannesburg. The reduced interest rates are especially beneficial for buyers at the lower end of the market.
“There is currently stability in the commercial property sector, which often leads the way in recovering from a downturn. As a result, we can expect to see a revitalisation of the residential property sector in due course.”
The table below demonstrates the impact of various interest rate cuts on a R1 million home loan bonded over 20 years.
|
Loan amount (no deposit)
|
Interest rate
|
Monthly bond repayment
|
|
R1,000,000
|
12%
|
R11,010.86
|
|
R1,000,000
|
11.75%
|
R10, 837.07
|
|
R1,000,000
|
11.50%
|
R10,664.30
|
|
R1,000,000
|
11.25%
|
R9, 816.43
|
Source: Landsdowne Property Group
Kohler emphasised that the 25 basis point rate cut boosts market sentiment. If interest rates reduce by a further 25 basis points later this year, it would represent a cumulative 100 basis points since the commencement of the lower interest rate cycle, which is significant.
“In Johannesburg and KwaZulu-Natal, this additional positive sentiment will help the property markets regain momentum. For those looking to enter at the lowest point, particularly in Johannesburg, now is the time to buy,” he added.
Read property commentary on the 20 March 2025 SA repo rate cut here.
Commentary on the 30 January 2025 repo rate cut. We hear from the Pam Golding Property group, ooba Group, Tyson Properties, Lew Geffen Sotheby’s International Realty, Rawson Property Group, High Street Auctions, Seeff Property Group and Landsdowne Property Group. For more repo rate insights from the experts see Here.
WORDS: SUPPLIED :: PHOTO: PEXELS
Pam Golding Property group – Dr Andrew Golding – Comments on the repo rate reduction – Very encouraging news for home buyers
“Today’s announcement by the Monetary Policy Committee of a further 25bps repo rate cut, bringing the prime rate to 11%, is very encouraging news for aspirant home buyers and those with existing mortgages, particularly as the outlook for interest rate relief has shifted significantly during recent weeks.
This is the third consecutive interest rate decrease, following reductions of 25bps at both the September and November 2024 MPC meetings, bringing the total interest rate relief in this current downward cycle to 75bps.
Although this month’s (January 2025) rate cut was widely anticipated, the outlook for interest rates for the remainder of the year is far less clear with opinions ranging from no further interest rate relief to one single cut of 25bps. However, the timing of any further rate cut is also debated with some commentators suggesting March 2025 and others later in the year.
This would make the current interest rate-cutting cycle unusually shallow. This is largely a reflection of the heightened uncertainty in the current global economy amidst concerns of a resurgence in inflationary pressures which is making many central banks – and the SA Reserve Bank in particular -cautious.
The stream of executive orders from the US White House is also creating uncertainty, prompting a reassessment of the likely scope for further interest rate cuts in the United States, which has shifted from initial expectations of three 25bps rate cuts to a single cut later this year. Fewer US interest rate cuts leave less space for local interest rate relief, and any further rate cuts will be dependent on developments both globally and locally.
Notwithstanding this potential uncertainty sentiment has improved, in general, with the previous two repo rate reductions of a cumulative 50bps in 2024 already creating a ripple effect across the residential property market – increasing uptake, particularly in the lower to middle sectors of the market, while also boosting confidence and activity in the luxury market.
Sales activity nationally is experiencing an uptick, with increased activity among first-time buyers – the most sensitive to interest rates – evident in the marketplace. According to ooba Home Loans, there is clear evidence of a recovery in first-time buyer demand during H2 2024, with notably strong growth in demand in Mpumalanga, Johannesburg and Gauteng South and East. The banks continue to support the housing market, with the average (weighted) concession relative to prime improving across all regional markets in 2024.
The demand for investment or buy-to-let properties surged to 15.1% of applications in December 2024, according to ooba, with investment demand averaging 12.6% of applications last year – up from 10% in 2023. While investment demand rose in most regions during the course of last year, this remains concentrated in the Western Cape, with 38.8% of all applications in Dec 2024 reflecting this demand.
From a Pam Golding Properties perspective, the increased activity in the residential property market is borne out by the fact that November and December 2024 were busy months, with our group sales well ahead of transactions concluded in Nov/Dec 2023.
For the local housing market, the recovery in house prices continues to gather momentum and become more broad-based. While the Western Cape remains the primary engine of the recovery, having consistently outperformed the national market during the past five years, the rebound in house prices has spread to most other regions as pressure on household finances eases.
According to the Pam Golding Residential Property Index, national house price inflation has risen steadily from below 2% in late 2023 to +5.1% in December 2024.”
Rhys Dyer – ooba Group – How the Latest Rate Cut Will Shape Homebuying in 2025
Today’s announcement of a further 25 basis point rate reduction marks another milestone for the residential property sector, lowering the repo and prime lending rates to 7.50% and 11.0%, respectively.
This news concludes the third rate cut in a period of less than six months, with the potential for further rate cuts anticipated during the first half of 2025.
Rhys Dyer, CEO of the ooba Group, welcomed the news – and the potential of a cumulative 100 basis points rate cut before the end of 2025. “Today’s announcement by the South African Reserve Bank (SARB), coupled with the potential for further relief, will aid growing momentum in South Africa’s residential property sector,” says Dyer, pointing to healthy growth in home loan demand.
He adds that with economic activity still at subdued levels and headline inflation at just 3.0% in December last year, one can definitely make a strong case for further interest rate relief locally, but that the global economic outlook may dictate some changes in the months to come.
“The global economic and inflation outlook is rather uncertain, and the SARB may be reluctant to cut interest rates too hastily and run the risk of any reversal in the progress achieved thus far in containing price pressures.”
Last Month’s Key Indicators Underpin Improved Outlook, Supported by Favourable Lending
In December 2024, following two interest rate cuts, ooba Home Loan’s statistics showed an increase in the average purchase price paid for property in the month to R1.67 million – a healthy 6.5% year-on-year increase.
“The average purchase paid by first-time homebuyers also rose to R1.26 million over the same period, marking a 6.7% increase,” continues Dyer.
Motivated by attractive interest rates, coupled with favourable bank lending conditions, Dyer says that national demand for buy-to-let properties surged to a record 15.1% in December 2024, reaching a new record level, up from a previous high of 14.8% in December 2023.
“Last month’s buy-to-let figures were almost entirely attributable to a 10.8 percentage point increase in demand in the Western Cape, with 38.8% of all applications received attributed to buy-to-let properties.”
First-time homebuyers benefited from the highest levels of loan-to-value (LTV) ratios seen in recent years at 90.4% in Q4’24 – compared to 88.4% a year ago.
“Our data shows that the banks continue to support homebuyers with 100% loans, despite the climate,” says Dyer.
Rate Cuts see Gauteng’s market starting to turn the corner
As the largest housing market in the country, the Gauteng region has been privy to excess supply over demand and weak house price inflation (HPI) in recent years.
After 15 long months of falling prices from year earlier levels, June 2024 saw the turning of a corner in the Johannesburg housing market. “Q4 ‘24 saw this trend gaining slightly more momentum, with the purchase price paid in this region averaging R1.69 million, 1.8% ahead of Q3 ‘24’s average of R1.66 million. This is hopefully a sign of a turning of the corner for the Gauteng market as we move into 2025.”
Looking Forward
Looking ahead, Dyer believes that it is currently a great time to enter the housing market. “Over the next year we anticipate double-digit growth in homebuying activity and transactions, underpinned by interest rate cuts and improved investor confidence. With many homebuyers looking to enter the market, our best advice is to seek out a trusted home loan comparison service to increase your chances of receiving home loan approval – and at the best possible rate.”
Tyson Properties – Interest rate cut comment
Chris Tyson, CEO of national real estate agency, Tyson Properties, today welcomed another 25 basis point cut by the South African Reserve Bank (SARB) Monetary Policy Committee (MPC) after its first meeting for the year.
Confident that further rates cuts are still to follow despite a slight uptick in the inflation rate to 3% in December (which remains below the SARB’s benchmark 4.5%) and global economic policy uncertainty in the wake of US President Donald Trump’s re-election, Tyson is confident that this latest cut is good news for the property market.
Interest rate cuts by the SARB are beginning to add up to some meaningful relief for South African home owners. As a result, Tyson Properties is positioning itself for a more buoyant market during 2025 and expects a recovery in key regions such as Gauteng and KwaZulu-Natal, while the Cape property market continues to perform.
Although Tyson believes that the SARB will continue along the ultra-cautious trajectory that saw repeated decisions to maintain the repo rate unchanged at a 15-year high of 8.25% until September 2024, he believes there is a strong chance that the interest rate might ultimately drop to around 7%. This will give both buyers and sellers waiting out the 2024 interest rate plateau more confidence to enter the property market, he says.
Over the long-term – and should the interest rate decline continue as expected – Tyson envisages that the residential property market will move from a buyer’s market to a normal market within two years.
Even if the SARB begins to hold rates once more at a lower point, he says that this should provide the property market with some stability and predictability which would entice those contemplating longer-term investments to look to buying properties.
Yael Geffen – Repo rate & Eskom tariff reaction – property sector
In response to today’s announcements of a 0.25% basis point cut to the prime lending rate and Eskom’s tariff increase for the year of 12.7%, Lew Geffen Sotheby’s International Realty CEO Yael Geffen says the government is “giving with one hand and taking with the other”.
“The net effect is negative for consumers because the significant increase in electricity costs outweigh the minimal benefit of the interest rate decrease.
“Make no mistake; business as a whole, particularly the property industry, is grateful for any cut to the repo rate, but today’s cut is too small to mitigate the electricity increase – which isn’t a luxury spend for households.”
Geffen says examining the interest rate cut shows that:
Impact on Borrowing Costs: Even though this is the MPC’s third consecutive 0.25-point cut and will reduce the cost of borrowing in terms of bond repayments, personal loans and credit cards, it’s still small and unlikely to have a noticeable impact on most consumers.
Impact on Savings: Lower interest rates mean reduced returns on savings accounts and other interest-bearing assets. Again, a 0.25 basis point change is negligible.
Overall Effect: The interest rate decrease is so minimal that it is unlikely to significantly affect consumer behavior or financial well-being.
But with regards Eskom’s tariff increase from April:
Impact on Household Budgets: A 12.7% increase in electricity costs is substantial and will directly raise utility bills for households. This could strain budgets, especially for low- and middle-income families who spend a larger proportion of their income on essential utilities.
Impact on Businesses: Higher electricity costs may lead to increased operating expenses for businesses, which will be passed on to consumers in the form of higher prices for goods and services.
Inflationary Pressure: Rising energy costs contribute to broader inflationary pressures, almost invariably leading to higher prices across the economy.
“In a nutshell, the interest rate decrease is too small to offset the significant increase in electricity costs and consumers are going to experience a net financial burden, particularly those who are more sensitive to changes in utility prices.”
Geffen says the other massive concern for the private sector is the bigger threat the economy potentially faces this year, which is sweeping changes to US foreign policies under the Donald Trump administration.
“South Africa isn’t exactly flavour of the day, month, year or even decade as far as this Republication-led government is concerned, and with the aggressively fronted ‘America First’ policy position, our country is particularly vulnerable.
“I hope to so see this addressed significantly in both the State of the Nation Address and the Budget speech as parliament reopens. If we don’t have a plan to address this diplomatic rift, South Africa’s economy could tank, regardless of any internal strides we’ve been making.”
Rawson Property Group, David Jacobs and Leonard Kondowe – Rate cut relief: How the property market stands to gain in 2025
The South African Reserve Bank (SARB) has announced yet another 25-basis-point cut to the repo rate – the third adjustment in just over four months. This brings the prime lending rate down to 11%, continuing a recent downward trend aimed at easing financial pressure on consumers.
For homeowners and prospective buyers, this is fantastic news. Experts from the Rawson Property Group, David Jacobs and Leonard Kondowe, share insights on how this development will impact the market in the short to medium term.
A sustained trend of relief
This latest cut follows two rate reductions in late 2024:
September 2024: The SARB reduced the prime lending rate by 25 basis points to 11.5% – the first rate cut in over four years.
November 2024: Another 25-basis-point cut brought the rate down further to 11.25%.
David Jacobs, Regional Sales Manager for the Rawson Property Group, believes these cuts are a turning point for the South African property market. “The consistent decrease in rates is a strong signal of SARB’s confidence in the economy’s ability to maintain lower inflation,” he says. “For the property market, this trend is unlocking affordability and creating momentum, especially among first-time buyers.”
Jacobs explains that the downward trend in rates is vital for market confidence.
“The market was stabilising after the post-COVID boom of 2022 and 2023. These rate cuts give us the push needed to stimulate fresh buyer interest, particularly in segments like the mid-market and first-time buyers.”
Immediate impact on buyers and investors
Lower interest rates directly translate to reduced bond repayments, which makes buying a home more accessible for many South Africans. Leonard Kondowe, National Manager for Rawson Finance, highlights how this environment benefits both new buyers and existing homeowners.
“Lower repayments reduce the income threshold needed to qualify for a home loan, which is a significant boost for first-time buyers,” Kondowe explains. “It also makes homeownership a more attractive option for renters who’ve been hesitant to take the leap. For existing homeowners, this is a perfect time to consider paying down debt faster or refinancing to take advantage of the lower rates.”
He advises prospective buyers to capitalise on this favourable climate. “While rates are trending down, saving for a deposit and securing prequalification remain key steps. A deposit not only improves your chances of bond approval but can also secure you a better interest rate, resulting in significant long-term savings.”
Market expectations for 2025
What’s next for the property market? Jacobs remains optimistic about 2025.
“It’s early in the year, but the signs are positive. While we can’t expect the explosive growth seen in 2022 and 2023, the current stability is healthy for the market. Buyers have more negotiating power, and banks are showing increased willingness to lend, especially to those without large deposits.”
He also believes that the interest rate environment could lead to renewed interest in long-term property investments.
“This trend makes it an ideal time for investors to re-enter the market. As affordability improves, demand will naturally increase, which could lead to stronger growth in the medium term.”
Strategic advice for buyers and sellers
Jacobs recommends that buyers act now to take advantage of the favourable conditions.
“Start by working with a trusted real estate agent who knows your area well. Pricing is competitive, and properties offering good value will be snapped up quickly.” For sellers, realistic pricing remains key.
“The market is stable, but buyers are savvy,” Jacobs says. “Setting a fair asking price is critical to attracting interest and securing a sale in this environment.”
Looking ahead
The SARB’s consistent rate cuts are creating a more accessible and sustainable property market. For buyers, this is the perfect time to step onto the property ladder or upgrade to their dream home. For existing homeowners, it’s an opportunity to reduce debt and strengthen financial stability.
Greg Dart – High Street Auctions statement on SARB interest rate cut
South Africa’s third consecutive interest rate cut is welcome news for the property sector. Although the prudent easing does not go far enough yet to ease the rising cost of living, it supports rising confidence that South African growth is on an upwards trend, buoyed by optimism around the Government of National Unity (GNU).
With interest rates rising by less than expected (3% year-on-year in December), market commentators had widely expected a 25-basis point interest rate cut this Thursday. With further cuts expected later in the year – market forecasts suggest further repo rate cuts of 0.25% to 0.5% for 2025 – the property sector could expect the final rate to settle between 7.25% and 7.5%. We will just need to remain wary of potential external risks, such as the U.S. trade policies and their impact on the rand.
For residential and commercial property in the country, these repo rate cuts will encourage more buyers to invest in South Africa.
Lower interest rates will help make home loans more affordable, potentially encouraging more buyers to enter the market. This increased demand may lead to a boost in property sales and could stimulate price growth in certain areas. However, the extent of this impact will depend on overall economic conditions and consumer confidence.
For the commercial property sector, lower interest rates can ease some financial pressure on businesses by reducing the cost of financing, while supporting increased investment and the sector’s recovery. However, the overall impact will depend on broader economic factors and the specific dynamics of the commercial property market.
High Street Auctions is cautiously optimistic that South Africa will see further interest rate relief over the medium term, despite recent reports around friction in the GNU, a slowdown in global growth and rising inflation in major economies.
Samuel Seef – Rate cut welcomed, but it should have been 50bps
While the 25bps interest rate cut by the Reserve Bank, taking the repo rate to 7.50% (from 7.75%), and the prime rate to 11% (from 11.25%), is welcome news for the economy and property market, Samuel Seeff, chairman of the Seeff Property Group says it’s simply not enough.
A 50bps cut would have been far more meaningful, and he says there was adequate support for the Reserve Bank to counter the economic stagnation and unemployment risks with a more robust cut. The country can no longer afford what is effectively the highest real interest rate in the world (differential between the interest rate and inflation) while the economy is limping along, barely growing, and unemployment is spiking.
Seeff says the lack of growth and unemployment is a far greater risk than inflation. Given that GDP growth and employment is the most critical element right now, it seems out of step for the Bank to persist with the interest rate policy aimed at containing inflation between 3% to 6% when inflation is in any event at the bottom of the target range.
Our view is that the Bank must prioritise GDP growth and reduced unemployment over exchange rate concerns. GDP growth and increased employment cannot be achieved with high interest rates. Only bolder rate cuts can provide the necessary economic stimulus, and there is historic precedents for the Bank to step in such as during the Covid-pandemic period for example.
Seeff says while there may be a trade-off on the exchange rate and concern about the impact on investment, a growing economy may well provide adequate counter-balance to this, and in fact encourage more investment. We could then potentially see the currency get stronger.
Seeff says the rate cuts last year provided some impetus for the property market with sales volumes increasing towards the latter part of the year. While this rate cut provides a further boost, he says more interest rate relief is needed to get the market back to the volumes of two years’ ago, and the resulting economic and tax boost that this can provide.
Nonetheless, it is a good time for buyers to get into the market and find good value, especially in Gauteng and inland provinces where stock levels are still high. If the economy remains stable, and we start seeing some growth, then on the whole, Seeff believes the property market should perform considerably better compared to last year.
Areas operating from a low base such as Gauteng could see good growth with increased sales volumes. Once stock levels start coming down, prices can then finally start rising more meaningfully.
Seeff believes the Western Cape, and most coastal areas which performed better last year compared to the inland areas will likely continue its good performance. Many areas in the Cape especially are already seeing low stock levels, and prices could again rise at inflation-topping levels.
As a result of the 25bps rate cut, mortgage repayments will reduce by:
R750 000 bond – from R7 869 to R7,741– thus saving R128
R900 000 bond – from R9 443 to R9,290 – thus saving R153
R1 000 000 bond – from R10 493 to R10,322 – thus saving R171
R1 500 000 bond – from R15 739 to R15,483 – thus saving R256
R2 000 000 bond – from R20 985 to R20,644 – thus saving R341
R2 500 000 bond – from R26 231 to R25,805 – thus saving R426
R3 000 000 bond – from R31,478 to R30,966 – thus saving R512
R5 000 000 bond – from R52,463 to R51,609 – thus saving R854
(Based on a 20-year repayment period at the prime rate)
Landsdowne Property Group (“Landsdowne” or “the Group”), one of South Africa’s largest residential real estate managers and estate agencies, has welcomed the 25 basis point interest rate cut, viewing it as a significant positive shift in market sentiment for the property market and especially the Johannesburg market which needs rejuvenation.
Landsdowne Property Group – Jonathan Kohler, Founder and CEO comments:
Interest rate cut is a significant sentiment shift for the property market especially in Johannesburg
“The 25 basis point interest rate cut is a positive step for the property market, particularly in Johannesburg, where lower rates unlock significant value. The cumulative 75 basis point reduction, which amounts to three quarters of a percent is a meaningful shift. Not only does this improve market sentiment, but it also enhances affordability, potentially sparking an uptick in buying activity.
“Each interest rate cut improves perceptions of the market and increases people’s willingness to purchase property. These reductions are exactly what Johannesburg needs to see a return of market activity.”
Kohler said now is an ideal time to buy property. When the Reserve Bank of South Africa (SARB) began raising interest rates, many adopted a ‘wait-and-see’ approach, hoping for signs of recovery in the Johannesburg property market before making a purchase.
However, Kohler advises that those who have been waiting to buy in Johannesburg should act now. Delaying too long could mean missing the opportunity as the market picks up and begins to recover. As the market strengthens, buyers may face higher prices but will benefit from increased activity.
“The rate cut is particularly significant for first-time buyers who have been weighing the cost of renting against bond repayments for owning property. With interest rates continuing to fall, rental prices are becoming increasingly comparable to bond payments, making ownership a more appealing option.”
Kohler said this trend is particularly noticeable with one-bedroom or studio apartments, where lower levies, rates, and taxes contribute to a shift from a renters’ market to a buyers’ market. As interest rates continue to decrease, their affordability improves and they will find better value in Johannesburg. The reduced interest rates are especially beneficial for buyers at the lower end of the market.
“There is currently stability in the commercial property sector, which often leads the way in recovering from a downturn. As a result, we can expect to see a revitalisation of the residential property sector in due course.”
The table below demonstrates the impact of various interest rate cuts on a R1 million home loan bonded over 20 years.
Loan amount (no deposit)
Interest rate
Monthly bond repayment
R1,000,000
12%
R11,010.86
R1,000,000
11.75%
R10, 837.07
R1,000,000
11.50%
R10,664.30
R1,000,000
11.25%
R9, 816.43
Source: Landsdowne Property Group
Kohler emphasised that the 25 basis point rate cut boosts market sentiment. If interest rates reduce by a further 25 basis points later this year, it would represent a cumulative 100 basis points since the commencement of the lower interest rate cycle, which is significant.
“In Johannesburg and KwaZulu-Natal, this additional positive sentiment will help the property markets regain momentum. For those looking to enter at the lowest point, particularly in Johannesburg, now is the time to buy,” he added.
Read property commentary on the 20 March 2025 SA repo rate cut here.