Toni Anderson, Head of Home Services at Standard Bank: The latest interest rate cut could mark a turning point for South Africa’s residential property market. The South African Reserve Bank has reduced the repo rate by another 25 basis points, bringing the prime lending rate down to 11%. This is the third rate cut since September 2024, and the first time the prime lending rate has been at this level since May 2023.
The two rate cuts introduced at the end of 2024 appear to have already sparked some recovery in residential property activity. Standard Bank observed a notable increase in home loan applications between Q3 and Q4 2024, reflecting improving buyer sentiment. This, combined with better economic outlooks, has encouraged sellers to price properties more competitively and motivated buyers to take action in select regions.
For example, Johannesburg’s housing market, which endured price declines throughout 2023, is showing signs of stabilisation. The combination of easing consumer inflation and the latest rate cut – with an additional 25 basis points reduction anticipated in March – could drive real-term house price growth in 2025. With affordability improving, this cut is expected to create a more favourable borrowing environment, providing buyers and sellers an opportunity to lock in benefits before rates stabilise.
Rawson Property: 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.
Frosty Snazz
Domestic inflation: The highest inflation rate ever recorded in South Africa was in January 1986, at 20.7%. Some of you may remember those bad days where each wag of P.W. Botha’s finger put an extra percentile to the inflation rate. That year the average inflation rate was 18.7%. During the 2008 financial crisis, South Africa’s inflation rate was 11.5%. In July 2018, the latest official monthly inflation rate was 5.1%. With inflation, this low, production cost increases can be expected to remain low, despite the large hikes in the petrol price. This reduces the perceived risk of starting a business in South Africa. Compared to Venezuela (200 000% inflation rate) we are not doing too badly!