Africa-Press – South-Africa. South Africa’s recent interest rate cut is set to boost the country’s property market going into 2025. However, consumers have been urged to remain cautious.
The Reserve Bank’s Monetary Policy Committee (MPC) has implemented a second consecutive interest rate cut, reducing rates by 25 basis points at its November meeting. This adjustment lowers the repo rate to 7.75% and the prime lending rate to 11.25%.
The decision was unanimous, with all MPC members supporting the move.
“The committee agreed that reducing the level of policy restrictiveness is still consistent with achieving the inflation target,” Reserve Bank Governor Lesetja Kganyago explained. “The risk outlook, however, requires a cautious approach.”
In the MPC’s announcement, Kganyago noted that the inflation outlook still has upside risks, and new risks are emerging.
“In the near term, inflation appears well contained. However, the medium-term outlook is highly uncertain, with material upside risks,” he said.
“These include higher prices for food, electricity and water, as well as insurance premiums and wage settlements.”
The bank expects inflation to stay below 4% until 2025, but it warned that higher inflation could arise in the second half of next year due to factors such as Eskom’s proposed electricity tariff increase.
While the cut offers relief to consumers facing high living costs, some experts have argued that it falls short, as many were expecting even deeper cuts.
Nevertheless, this cut is set to relieve homeowners of some mortgage burdens and attract a wave of first-time homebuyers to the property market.
With optimism surrounding the Government of National Unity (GNU), dropping petrol prices, and the expectation of further rate cuts, South Africa’s property market is set to experience tailwinds going into 2025.
This is what the experts are saying.
Dr Andrew Golding – Pam Golding Property Group CEO
According to Golding, the rate cuts will boost housing market activity, particularly among first-time buyers sensitive to interest rate changes.
According to ooba Home Loans, demand from this group surged in September as lower rates improved affordability.
Regions like Gauteng, Mpumalanga, and the Free State, where first-time buyers are active, are seeing increased market activity.
Additionally, factors like improved confidence from the Government of National Unity (GNU), easing inflation, and petrol price cuts are supporting the market.
While November saw a slight fuel price hike, a major R2/litre drop is expected in December, which will reduce price pressures even more.
Golding noted that the S&P Global’s improved outlook on South Africa, driven by faster reforms and fiscal discipline, is a sign of economic recovery.
He anticipates further interest rate cuts in 2025 of around 100 basis points, which will offer continued relief to consumers and stimulate the housing market.
Samuel Seeff – Seeff Property Group chairman
Seeff Property Group CEO Samuel Seeff
Seeff said that the Reserve Bank’s repo rate cut is positive for property and the economy but falls short of expectations.
This second consecutive cut follows a global trend, including larger reductions by the US Fed, BoE, and EU Central Bank.
While the rate cut provides relief, Seeff argues that a 50 basis point cut would have offered a more significant boost, especially as inflation dropped to 2.8% – below the 3%-6% target range and its lowest since before the pandemic.
Lower rates are crucial to drive economic growth, job creation, and a more robust housing market recovery.
With improved economic sentiment from the Government of National Unity, reduced inflation, and no load-shedding, Seeff foresees a revival in the residential property market in 2025.
Areas like Gauteng, Gqeberha, Mpumalanga, and Limpopo, which have surplus stock and subdued growth, are expected to see higher sales volumes but gradual price increases.
In contrast, coastal regions like the Western Cape, which are facing stock shortages, could experience price growth of up to 15% to 20%.
As a result of the 25 basis point rate cut – based on a 20-year repayment period at the prime rate – mortgage repayments will reduce by:
R750 000 bond – from R7 998 to R7 869 – thus saving R129
R900 000 bond – from R9 598 to R9 443 – thus saving R155
R1 000 000 bond – from R10 664 to R10 493 – thus saving R171
R1 500 000 bond – from R15 996 to R15 739 – thus saving R257
R2 000 000 bond – from R21 329 to R20 985 – thus saving R344
R2 500 000 bond – from R26 661 to R26 231 – thus saving R430
Chris Tyson – Tyson Properties CEO
Tyson welcomed the repo rate cut but urged homeowners to remain cautious heading into 2025.
While further rate cuts totalling 50 basis points are expected in the first half of next year, Tyson advised consumers to use the relief wisely by reducing debt or maintaining current home loan payments to pay off bonds faster and save on interest.
He highlighted that homeowners could save significantly by paying down their bonds quicker, noting that these savings are tax-free as they reduce future costs rather than generate income.
For example, the latest rate cut reduces monthly payments by R171 on a R1 million bond and R344 on a R2 million bond, which can accumulate into meaningful savings over time.
He urged consumers to budget for maximum interest rates to ensure financial stability even if rates rise.
He also cautioned that, despite the downward trend in rates, uncertainties such as rising global petrol prices, external economic pressures, and a potential tightening of the SARB’s inflation target could impact household finances.
While the property market remains buyer-friendly, Tyson advised careful decision-making, particularly in choosing homes with features like solar power and water-saving facilities to offset rising utility costs.
He also stressed the importance of viewing property purchases as medium- to long-term commitments to avoid losses in volatile markets.
Despite challenges, Tyson remains optimistic about the 2025 property market recovery, driven by improved affordability and demand.
Stephen Whitcombe – Firzt Realty Group MD
Whitcombe said this week’s interest rate cut presents an excellent opportunity for homeowners to reduce their home loan repayment periods and save significantly on the overall cost of their properties.
While the monthly repayment reduction is modest – just R17 per R100,000 borrowed over 20 years – this translates to R172 a month on a R1 million bond and R343 on a R2 million bond.
Combined with September’s rate cut, this makes it easier for potential buyers to qualify for loans and manage repayments.
For instance, on a R750,000 first-time buyer loan at prime, the required income has dropped to about R26,200, with a lower monthly repayment of R7,870 compared to R8,130 in August.
Whitcombe encouraged existing homeowners to maintain their repayments at pre-rate cut levels to reduce their bond terms and save thousands in interest costs.
With inflation down to 2.8% in October, this should ease the strain on household budgets. He also suggests allocating part of any January pay raises—predicted to average 6%—to home loan repayments, which can further accelerate debt reduction.
Whitcombe also advised homeowners to put at least 50% of year-end bonuses into their home loan accounts.
These lump-sum payments reduce the capital amount on which interest is charged, creating significant savings and shortening repayment terms.
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Yael Geffen – Lew Geffen Sotheby’s International Realty CEO
Lew Geffen Sotheby’s International Realty CEO Yael Geffen
The second consecutive 25 basis point cut to the prime lending rate, while modest, is a step in the right direction for South African consumers entering the festive season, Geffen said.
The new repo rate translates to approximately R340 savings on a R2 million bond at prime. While this offers some relief, Geffen notes that more is needed to significantly impact strained household finances.
“Any cut to the repo rate right now is good news, and business understands that Governor Lesetja Kganyago needs to act cautiously, balancing what consumers are crying out for with what is in the longer-term interests of the country’s economy.”
“We take all the good news we can get, like the fact that annual consumer price inflation for October was only 2.8%, down from 3.8% in September 2024.”
“It’s below the Reserve Bank’s target and the lowest inflation since the height of the pandemic in June 2020, when the rate was 2.2%.”
The more than 200 days without load-shedding, a five-year record for Eskom, is also extremely positive since grid instability has been a major constraint on the country’s economic growth.
Geffen said that Kganyago’s optimistic forecast of further repo rate cuts in 2025 could bring the rate closer to 7%, bolstering the country’s economic prospects.
However, she warned of potential headwinds, including the recent US dollar strength following Donald Trump’s re-election as president, which has weakened the rand from R17.29/$ to around R18.15.
Trump’s proposed tariff hikes and tax cuts could challenge South Africa’s economy, while the rand’s depreciation may drive inflation higher.
Geffen also referenced the uncertain geopolitical landscape, with the International Criminal Court’s issuance of arrest warrants for Israeli and Hamas leaders, potentially impacting diplomatic and economic dynamics.
Despite these challenges, Geffen said the property market has already felt a positive shift since September’s interest rate cut.
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