This week on 20 March, 2025, the South African Reserve Bank (SARB) announced its repo rate decision. The SARB plays a crucial role in the property sector through its monetary policy, which impacts interest rates, and ultimately affects affordability and demand for housing and commercial properties. We hear from top players in the property milieu how this impacts the sector. Scroll down for insight from Tyson Properties, High Street Auctions Co, Landsdowne Property Group, ooba Group, Chas Everitt International, FIRZT Realty, Lew Geffen Sotheby’s International Realty, Seeff Property and Pam Golding Property Group.
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Chris Tyson, CEO of Tyson Properties
An intricate balancing act is how Chris Tyson, describes the current state of play within South Africa’s property sector following today’s decision by the South African Reserve Bank Monetary Policy Committee to pause interest rate cuts, leaving the benchmark rate at 7.5%and the prime lending rate at 11%.
Although Tyson predicted a series of cautious rate cuts between September last year and mid-2025, this halt in no way means that the interest rate easing cycle is at an end, he believes.
The Reserve Bank has cut interest rates three times since September 2024. Although, individually, each 25 bps cut did not have a major impact on home financing, the combination of three consecutive cuts is still beginning to have a positive impact and is sparking improved market sentiment.
Tyson points out that with the consumer inflation remaining unchanged in February 2025, this remains within the Reserve Bank’s favoured target band opening the way for further rates cuts later this year. With fuel prices holding steady together with the rand despite US President Donald Trump’s decision to expel the South African ambassador, he remains optimistic that there will be further relief further down the line.
Transfer duty adjustments announced in the government budget are another positive signal for property investors, especially those entering the market for the first time. Buyers at the bottom end of the market will not have to pay transfer duties on properties below R1.21 million, Tyson adds.
However, although the VAT increase will not directly impact property sales, he says that it will ultimately put pressure on peripheral costs such as legal fees, agent commissions, home related services and construction. Already, month-on-month inflation has accelerated due to increased pressure on the prices of food and financial services and the VAT increase is expected to exacerbate this.
Tyson cautions buyers and sellers to carefully balance the leeway afforded by the previous rates cuts against other factors that could impact on household disposable income, including the proposed increase in VAT and upcoming hikes in electricity tariffs in April.
In the short to medium term, he says it remains important for sellers to price their properties correctly to attract the now growing pool of more optimistic buyers in most key markets across South Africa. On the flip side, buyers need to exercise caution and stay well within their means when purchasing new properties – but can be more confident knowing that a more positive market is already paving the way for an improvement in property values.
Greg Dart, Director High Street Auctions Co
The decision by the Reserve Bank Monetary Policy Committee to pause its cautious course of 25-basis point interest rate cuts dating back to September 2024 is unlikely to stem the positive sentiment in the property sector.
Today’s decision to hold the benchmark interest rate at 7.5%, after three consecutive quarter-point cuts reflects the Reserve Bank’s default position of caution as it evaluates the full impact that government’s recent stop-start budget and America’s fluctuating trade policies will have on inflation.
Despite US President Donald Trump’s decision to expel South Africa’s ambassador and hints that this country may no longer benefit from the Africa Growth and Opportunity Act (AGOA), all is not doom and gloom when it comes to South Africa’s economy.
It is interesting to note that the rand held firm in the face of this potential negativity, perhaps signalling a favourable response to the fact that the ANC’s policy making will be tested by the Government of National Unity.
An expectation of 1.8% economic growth and the potential for inflation to remain within the Reserve Bank’s favoured inflation target range of three to six percent, augurs well for further interest rate cuts later in the year with the strong possibility of the repo rate even settling at 7% and the prime lending rate at 10.5% further down the line.
Investors – and especially those looking to repurpose commercial properties for residential sale – stand to benefit not only from the interest rate cuts to date but also from the adjustment in transfer duties on properties below R1,21-million announced in the recent proposed budget.
However, as with the Reserve Bank, caution is important and all need to remain aware that the proposed VAT increase and electricity tariff hikes due to take effect in April which will put pressure on households’ disposable incomes.
Commercial property investors, in particular, will need to wait to fully benefit from a reduction in the cost of raising finance. This sector remains over supplied across all markets except for the Western Cape.
The High Street Auction Co therefore remains optimistic that the property sector as a whole continues to move in the right direction and that positive sentiment will gather momentum during 2025.
Jonathan Kohler, Founder and CEO of Landsdowne
The bottom line: MPC’s decision to hold rates firm, vat increases could put the brakes on recovery in residential property demand
Landsdowne Property Group, one of South Africa’s largest residential real estate managers and estate agencies, says the South African Reserve Bank’s hawkish stance on interest rates, rising living costs and the upcoming VAT hike could put the brakes on positive momentum in the residential property market.
“In an environment of rising living costs, affordability remains a major factor. The MPC’s decision to hold interest rates and concerns over economic growth will likely impact investor sentiment in the short term, as buyers adopt a wait-and-see approach.”
Kohler added that potential buyers in certain market segments may opt to continue to rent, due to the added certainty provided by a fixed-cost lease.
Upcoming changes to transfer duties could, however, stimulate buying activity in the more affordable segments of the property market. While transfer duties have risen by about 10%, those purchasing properties valued up to R1.210 million will be exempt from paying transfer duty, starting from 1 April 2025. This marks an increase from the previous threshold of R1.1 million.
“This adjustment marks a significant and welcome shift for the property market, especially in the secondary sector. By boosting affordability in the lower- to middle-income brackets, we foresee heightened interest from first-time buyers and upward momentum across various property segments. This move has the potential to drive market activity and benefit both buyers and sellers.
“Additionally, while the higher-end property market faces increased transfer duties, the impact is expected to be minimal, as buyers in this segment typically have greater financial flexibility and are unlikely to be deterred by the adjustment,” added Kohler.
Despite concerns over economic growth, investor confidence remains buoyant, with the Absa Homeowner Sentiment Index for the fourth quarter of 2024 showing that 85% of investors are optimistic about expanding their portfolios – the highest level of investor confidence since 2016.
“Expectations of stable or lower inflation and further interest rate cuts in May and possibly later this year are expected to continue to drive property investment, but at a slower pace. Savvy investors will want to lock in value now. Gauteng in particular offers exceptional value for money, as house prices have remained stagnant for almost a decade,” he said.
Rhys Dyer, CEO of the ooba Group
The bottom line: Rate Hold Still Bodes Well for Homebuyer Confidence
Today’s decision by the South African Reserve Bank’s (SARB) Monetary Policy Committee to keep the repo rate at 7.5% and the prime lending rate at 11% marks the first pause following three consecutive cuts. Despite the hold, this stability remains a positive signal for homeowners and buyers, reinforcing confidence in a steadily recovering property market.
The cautious stance taken by global central banks – including the SARB and the US Federal Reserve – likely reflects concerns over escalating trade tensions between the US and key trading partners such as China, Canada and Europe.
However, Rhys Dyer, CEO of the ooba Group believes that current market conditions may support a further 25 basis point rate reduction in May. “In 2025, we’ve seen several positive market factors including the strengthening of the rand against the US dollar and below target local inflation numbers in the first quarter. Additionally, concerns over the financial strain on consumer demand of a VAT increase may create room for the MPC to lower interest rates further.”
Furthermore, Dyer believes that robust lending activity by major banks and cumulative interest rate cuts of 0.75% since September ‘24 will further support and incentivise homebuyers in 2025.
Transfer Duty Threshold Increase: A Win for Homebuyers
The property market has received a further boost following the Finance Minister’s announcement of an increase in the property transfer duty thresholds in the recent Budget Speech.
Effective 1 April 2025, and subject to approval by Parliament of SA’s 2025 Budget, the threshold for exemption from paying transfer duty has been raised by 10% from R1.1 million to R1.21 million, with all subsequent tiers raised by 10%. The transfer duty tax rates remain unchanged.
“This adjustment is particularly beneficial for first-time homebuyers where the average purchase price currently sits at just slightly over the R1.21 million mark,” says Dyer, adding that it reduces the upfront costs associated with buying a home and will enable more South Africans to realise their dream of homeownership.
South Africa’s Housing Market Remains Resilient
Despite broader economic pressures, South Africa’s housing market continues to show resilience.
“National house price inflation climbed by +3.0% during Jan/Feb ‘25 compared to year-earlier levels,” says Dyer. “Among the major regional markets, Tshwane registered an increase of +10.1% during this period while prices in Johannesburg rose by +2.6%. Limpopo and the Free State also demonstrated robust growth in early 2025 at +12.% and +13.2%, respectively.”
In addition, the banks are easing pressure on homebuyers by still offering attractive discounts on the prime lending rate and ooba Home Loans is currently achieving an average interest rate of prime minus 0.55% for its customers.
“We are really optimistic about the local property market for the remainder of 2025. The combination of stable interest rates, the increase in the transfer duty exemption threshold, and a resilient housing sector creates a positive environment for buyers” he concludes.
Berry Everitt, CEO of the Chas Everitt International property group
South Africa’s Reserve Bank is known for its cautious approach so it is no surprise to most that it decided this week to keep interest rates unchanged, says Berry Everitt.
The move followed the announcement by the US Federal Reserve that it would also keep rates at current levels for now, and the news that the inflation rate for February remained unchanged from January at 3,2%.
“What is more, the Bank is clearly expecting inflation to shift up even closer to 4,5%, the midpoint of its target range, in the coming months as a result of the 13% Eskom electricity price increase that will start to take effect in April and a possible VAT increase of 0,5 percentage points.
“However, it has also revised its expected GDP growth rate down to 1,7% for 2025, which will clearly not do much to address SA’s critical unemployment problem.”
From a real estate point of view, this situation is likely to lower consumer and investor confidence and put a damper on home sales overall, but will also most likely increase the demand for rental properties – and the scope for rental increases if salaries continue to increase at above-inflation levels.
Denese Zaslansky, CEO of the FIRZT Realty group
The Reserve Bank decision this week to keep interest rates unchanged was widely expected but still disappointing for consumers and especially prospective homebuyers, says Denese Zaslansky.
“However, it is a further strong indication that those who are planning to buy property this year should not delay any longer. Property prices are rising faster now than in the past two years due to increased demand, which means that prospective buyers will need bigger home loans and more income to qualify if they hang back now in the hopes of interest rate cuts later in the year.
“They should rather take advantage of the fact that bank lending criteria have eased in the wake of the three rate cuts made in September 2024, November 2024 and January this year and the improved financial position of most households. According to the latest statistics from mortgage originator BetterBond, this has resulted in a year-on-year drop of 6,8% in the average deposit amount required by the banks. This is especially good news for new buyers, who usually have to pay the deposit in cash, while repeat buyers can usually cover any deposits required from the proceeds of the sale of their previous homes.”
Zaslansky notes that the BetterBond figures also show that house prices have increased at an average annual rate of 5,5% over the past five years – which is a further indication of the benefits to be gained by entering the market as soon as possible. “And if there are then further interest rate cuts this year, as there may well be, buyers will be even better off, as they will then be paying less each month for a home of their own that is gaining in value.”
Yael Geffen, CEO Lew Geffen Sotheby’s International Realty
Geffen says it’s extremely disappointing after such positive predictions regarding the prime lending rate towards the end of last year, that the three-meeting cycle of minute repo rate drops has already come to an end.
“We’ve seen a 75-basis point drop in recent months, but it’s absolutely not enough to get consumers out of the horrific debt situation that everyone from the lowest to the highest income earners are trapped in.
“DebtBusters’ Q4 2024 figures reveal that South Africans are allocating an alarming 68% of their take-home pay to service debt – the highest level since 2017. For higher earners taking home more than R35 000 per month, the situation is even more dire, with 74% of their income going toward debt repayment.
“This is unsustainable. Right now, we have nearly 45% of South Africa’s population receiving welfare grants, but continue in this direction and that number is going to rocket to put well over 50% of the country over the poverty line.
“Add a VAT increase and the picture is not pretty.”
Geffen says the ANC’s chest-thumping head-to-head with Western nations has to stop.
“The Reserve Bank Governor made reference in his announcement of an unchanged rate, to the fact that ‘the global economy is not on a stable footing’, which is a politically correct way of saying that we’re losing the game of chicken we’re playing with America and its allies.
“If we don’t immediately revise our foreign policies, the outlook is going to get a lot worse and the ultimate losers will be South Africa’s citizens.
“As business, we call on the government to start working for the good of the country, not the good of certain people within the majority party.
“It’s no longer about balancing economic outlooks; it’s now a matter of survival for South Africa as a nation.”
Samuel Seeff, Chairman of the Seeff Property Group
The bottom line: Unchanged interest rate disappointing, missed opportunity
The decision by the Monetary Policy Committee of the SARB to retain the interest rate at the current level of 7.50% (prime rate at 11%) is disappointing, and a missed opportunity to provide vital relief to consumers and property buyers, and a boost to the economy, says Samuel Seeff, chairman of the Seeff Property Group.
Despite the decision by the US Fed to retain its interest rate at the current level, usually an indicator of which way the SARB may go, Seeff says there were compelling reasons and an opportunity for the Bank to step in with an interest rate cut, not just of 25bps, but even a more meaningful cut of 50 bps.
The news that inflation remained 3.2% for February provides further support that there is a window of opportunity given that inflation remains contained near the bottom of the Bank’s inflation target range while the currency has remained fairly stable. Seeff says it is regrettable that the Bank did not take advantage of the economic benefits which could flow from a lower interest rate in the current climate.
Notably, the interest rate is still 100 bps above the pre-Covid level while inflation has come down considerably, now at 3.2% for the last two months compared to the average of 4.4% for 2024, and 6% average in 2023. He says the gap between the interest rate and inflation remains one of the highest in the world (according to economist, Dr Roelof Botha).
Keeping the rate so high for so long continues to do more damage than good to the economy, especially when it needs vital stimulus to boost growth and job creation, the lack of which pose a far greater risk than inflation. Households are already burdened by the higher cost of credit, including home loans, on top of further Eskom tariff, VAT and tax hikes.
Seeff says the property market has kicked off the year on a busy note with sales volumes continuing to increase as buyers take advantage of the lower interest rate. The continued favourable mortgage lending conditions, along with the increase in the transfer duty exemption threshold is a boost for the market. Stock levels are coming down, and prices are likely to start increasing more meaningfully compared to the last two years.
The luxury property market has seen a particularly strong start to the year, especially in the Cape Metro area where we are seeing an influx of local and international buyers snapping up high value properties. This also correlates well with information from ABSA that confidence in the property market is at the highest level in 10 years.
Dr Andrew Golding, Chief executive Pam Golding Property group
The bottom line: Unchanged repo rate disappointing news for home buyers
“With the February 2025 consumer inflation rate unchanged at 3.2% – below market expectations – the Monetary Policy Committee’s decision not to reduce the repo rate was disappointing for existing mortgage holders and aspirant home buyers.
“This means that the SA Reserve Bank repo rate remains 7.5%, while the prime lending rate stays at 11.0%.
While economists were divided ahead of the MPC decision, some argued that given the sluggish state of the local economy, real (inflation-adjusted) interest rates are too high, suggesting scope for further interest rate relief. Those analysts who predicted no cut at today’s MPC meeting were generally forecasting further interest rate reductions later in the year when – it is hoped – there is more global economic certainty, and as long as inflation remains contained.
Meanwhile, a large petrol price cut is anticipated in April, currently estimated at around 80-90c per litre, which could further help to dampen inflation.
That said, the economic outlook is currently uncertain, with erratic trade tariff policies in the US causing a deterioration in global growth expectations and a worsening in the inflation outlook. Across the ocean, US consumer inflation expectations have surged to the highest level in 30 years as a result of the tariff turmoil.
For existing homeowners and residential property investors, there is comfort in the fact that national house price inflation has risen steadily from a low of 2.2% in late-2023 to +6.22% in February 2025, according to the Pam Golding Residential Property Index, which is the strongest growth rate in national house prices since late-2007. This rebound has also outpaced the turnaround in the consumer inflation rate from a low of 2.8% in October 2024 to 3.2% in February 2025, resulting in real (inflation-adjusted) growth in house prices for six consecutive months. Real house prices rose by +3.0% in February 2025, a level last seen in September 2007.
Notably, growth in house prices has accelerated across all three major regions. The recovery in Western Cape house price inflation continued to gather momentum in February 2025, rising to +6.04% from a lower turning point of +4.7% in March 2024, while both Gauteng and KwaZulu-Natal continued to rebound strongly last month (February 2025), rising to +4.5% and +3.11% respectively. (Source: Pam Golding Residential Property Index)
According to a significant data revision by Lightstone, sectional title house prices have also experienced a rebound, with growth rising to +2.4% in February 2025, with freehold house price inflation easing to 3.4% in the same period.
The gradual recovery in first-time buyer demand has continued in early 2025, with the percentage of applications received from Ooba Home Loans rising to 46.6% in February as the 25bps rate cut at the January 2025 MPC meeting boosted demand. The recent National Budget announcement that the threshold for exemption from paying transfer duty rises from R1.1 million to R1.21 million is a further incentive for first-time buyers.”
Read property commentary on the 30 January 2025 repo rate cut here and here.
