Editor
“The decision by the Monetary Policy Committee of the SARB to retain the interest rate at the current level of 7.5% (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.
Many believe more cuts are still to come
An intricate balancing act is how Tyson Properties CEO Chris Tyson describes the current state of play within South Africa’s property sector following the pause in interest rate cuts.
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 consumer inflation remaining unchanged in February 2025, this remains within the Reserve Bank’s favoured target band, opening the way for further rate cuts later this year.
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.
In the meantime, stability is confidence-boosting
Tony Clarke, MD of Rawson Property Group, concurs, saying that the pause supports affordability and gives both buyers and homeowners a welcome sense of predictability.
“A stable interest rate environment gives buyers confidence to move forward without fear of sudden repayment increases,” says Clarke. “For homeowners with existing bonds, it also means no rise in monthly repayments, allowing them to manage budgets more effectively.”
While many were hoping for a rate cut, Clarke sees stability as a positive sign for long-term property growth.
“Steady interest rates encourage consistent market activity rather than drastic shifts,” he explains. “This is good for buyers, sellers, and investors looking for predictable conditions.”
Meanwhile, the market is growing
Dr Andrew Golding, CE of Pam Golding Properties, points out that 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.
Now is the time to buy
Denese Zaslansky, CEO of the FIRZT Realty group, believes the MPC’s decision is a further strong indication that those 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 instead 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.”
