Repo rate reaction – Yael Geffen Property Sector

Statement by Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, on the Monetary Policy Committee’s Decision to Hold the Repo Rate Steady at 6.75.

The South African Reserve Bank’s (SARB) decision to maintain the repo rate at 6.75% is a prudent holding pattern. It is also unsurprising. This comes amid an increasingly turbulent global and domestic climate, according to Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty.

“Governor Lesetja Kganyago’s sobering remarks on a ‘rupture in the global political order’ and ‘new threats to central bank independence’ underscore that this is no ordinary economic cycle.

“The MPC is navigating a perfect storm of geopolitical instability. This includes volatile commodity prices. It also includes specific local shocks like the foot-and-mouth disease impact on food inflation.”

Geffen says that given the palpable uncertainty, a wait-and-see attitude from the MPC is perhaps the only rational stance. This uncertainty ranges from protracted international conflicts. It also includes concerning diplomatic and trade tensions between South Africa and its most critical partners, the United States.

“The acknowledgement of a stronger rand and lower oil prices providing some respite is welcome. However, these are fragile buffers against the larger structural shocks defining the start of 2026.

“This hold continues the trend of stability we have seen since the last hike of 25 basis points in November 2024. This brought the rate to the current 6.75%. Over the past six months, the MPC has consistently signalled a cautious plateau. It has prioritised the fight against inflation. At the same time, it has been acutely aware of the immense pressure on already strained South African households and businesses.”

Repo Rate Outlook and Economic Uncertainty

Geffen says it is therefore not surprising that economists are divided. This reflects the exceptional uncertainty.

“Predictions for the remainder of 2026 range from a potential cut in the latter half of the year. This would occur should inflation subside more convincingly and global conditions improve. There is also the possibility of another hike. This would happen if currency or inflation pressures flare up.

“I’m in the predominant view, however, that an extended period of stability is most likely. This would see the repo rate remaining higher for longer. It would anchor expectations. It would also help manage risks.”

Clarity and Challenges for the Residential Property Market

Geffen says the first repo rate announcement of the year speaks clearly to the property market outlook.

“The stability in borrowing costs is a positive. It allows buyers and sellers to transact with greater confidence than in a volatile rate environment.

Moreover, it sustains a measure of predictability for mortgage holders. It also benefits those seeking finance. We are likely to see a continued market characterised by selectivity and value-consciousness. This is rather than a surge or a dramatic contraction.

“However, the high cost of credit continues to be a significant headwind. Affordability remains the primary constraint. This affects first-time buyers and those seeking to upgrade.”

Geffen believes the market will continue to favour well-priced, quality stock in sought-after areas. Properties that are overvalued or located in less desirable areas will struggle. The buy-to-let segment may see sustained interest. This is as rental demand remains robust. However, investors will be meticulously scrutinising yields.

Property Sector Outlook Amid Global Shocks

“The SARB’s hold is a reflection of a world, and a year, that has unequivocally begun with a new round of shocks. For the property sector, it underscores the need for resilience. It also highlights the importance of accurate pricing and expert guidance.

“While the path to lower rates seems delayed by global fractures, the current stability provides a firm foundation. It is a demanding foundation. It supports sensible real estate decisions.”

Samantha Bartlett, MCIPR

Managing Director

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