On 20 March 2025, the South African Reserve Bank's Monetary Policy Committee (MPC) decided to maintain the repo rate at 7.5% and the prime lending rate at 11%, pausing the rate-cutting cycle initiated in September 2024. This decision reflects concerns over global economic uncertainties and domestic fiscal challenges, including potential trade tensions and budgetary risks.
Some within the property sector are disappointed by the Monetary Policy Committee’s decision, others highlight that the three previous cuts (from September 2024) are still in play, which will continue to stimulate activity in the sector.
When the interest rate comes down, residential properties are more affordable and competition increases, which means sellers may be able to attract a higher price. When the interest rate stays the same, or increases, a large percentage of potential buyers take a wait-and-see approach.
Comments by industry professionals include:
Jonathan Kohler, Founder and CEO of Landsdowne Property Group
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. Potential buyers in certain market segments may opt to continue to rent, due to the added certainty provided by a fixed-cost lease.
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.
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett
While I acknowledge the risks to our inflation expectations, I still think that the SARB acted too cautiously. A rate cut would have provided much-needed relief to consumers who might be facing increased financial strain due to key decisions announced in the Budget Speech. An interest rate cut at this time could have offset some of this potential strain and create greater opportunity for economic growth – which is something our country desperately needs. Future decisions by the SARB will depend on inflation trends and global economic conditions – both of which are facing significant upside risks that could lead to the Reserve Bank maintaining its tight stance on interest rates going forward. Those who are already in the market or are hoping to get into the property market should work closely with real estate professionals to make informed decisions as and when market conditions change.
Samuel Seeff, chairman of the Seeff Property Group
The decision is disappointing, and a missed opportunity to provide vital relief to consumers and property buyers, and a boost to the economy. There were compelling reasons and an opportunity for the (Reserve) 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. It is regrettable that the Bank did not take advantage of the economic benefits that could flow from a lower interest rate in the current climate.
Chris Tyson, CEO of Tyson Properties
The current state of play within South Africa’s property sector is an interesting balancing act. This halt in no way means that the interest rate easing cycle is at an end. The combination of three consecutive interest rate cuts since September 2024, is still to have a positive impact and is sparking improved market sentiment. With consumer inflation remaining unchanged in February 2025, which remains within the Reserve Bank’s favoured target band, is opening the way for further rates cuts later this year. 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 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.
Greg Dart, director of High Street Auctions Co
The decision by the MPC to hold the rate is unlikely to stem the positive sentiment in the property sector and reflects the Reserve Bank’s default position of caution as it evaluates the full impact that government’s recent stop-start budget and the effect of global trade policies on inflation. 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. We remain optimistic that the property sector as a whole continues to move in the right direction and that positive sentiment will gather momentum during 2025.
Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty
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. Add a VAT increase and the picture is not pretty.
As business, we call on the government to start working for the good of the country. It’s no longer about balancing economic outlooks; it’s now a matter of survival for South Africa as a nation.
