Property sector reacts to SARB's expected decision to maintain interest rates

While the South African Reserve Bank’s Monetary Policy Committee decision to keep interest rates unchanged was expected, the local property experts remain disappointed that the SARB has not adopted a more accommodative stance for economic recovery.

“While we understand the SARB’s need to act cautiously in the face of global uncertainty, today’s decision is likely to come as a disappointment to many South Africans who were hoping for some financial relief," says Adrian Goslett, regional director and CEO of REMAX Southern Africa.

“Consumer budgets are still stretched owing to slow economic growth. Even a small rate cut could have provided a welcome buffer for homeowners and potential buyers alike.”

On Thursday, the Monetary Policy Committee (MPC) announced that interest rates will remain unchanged at 7% (repo rate) and the prime lending rate at 10.5%.

“The MPC decided to keep the policy rate unchanged, at 7%, with four members preferring to keep rates on hold, while two favoured a cut of 25 basis points.

“Since September last year, we have reduced rates by 125 basis points, and we want to see how this is affecting the economy, how expectations evolve, and how inflation risks are resolved,” said Lesetja Kganyago, the governor of the South African Reserve Bank.

REMAX says while inflation remains low, the Reserve Bank appears to have opted for stability over stimulus, choosing to hold rates until there is greater clarity on external risks such as global trade tensions and domestic fiscal pressures.

The real estate agency says analysts widely anticipated that any potential rate cuts would be postponed to the second half of this year, assuming inflation remains contained and international conditions stabilise.

Despite the slow economic conditions, the company says the housing market has been able to remain active.

According to the Q2 2025 REMAX National Housing Report, the REMAX SA network’s registered sales grew by an impressive 11.7% in Q2 2025-with the growth likely to continue in the months to come, with the brand’s reported sales (i.e. deals that have not yet been finalised through the Deeds Office) for this period growing by a staggering 18.9%.

According to Goslett, “The property market has shown resilience in the face of numerous challenges. Our network’s results outperform the broader market conditions. Overall, growth within the local housing market remains hampered until there is a more meaningful reduction in interest rates or a notable improvement in economic conditions."

“We remain hopeful that conditions will allow for a rate cut in the second half of 2025. In the meantime, we encourage homebuyers to make use of favourable property prices and lenders’ appetite to finance well-qualified applicants,” he says. 

The decision by the Reserve Bank to keep the repo rate unchanged is a huge missed opportunity for the economy and property market, says Samuel Seeff, chairman of the Seeff Property Group.  

He says this is particularly disappointing given that the US Fed announced a rate cut of 25-bps yesterday. Seeff says just based on the currently favourable economic fundamentals, there was ample room for the Bank to provide another rate cut.

Inflation has moderated to 3.3%, comfortably near the Bank’s lower target range, and the rand has remained stable at around the R17.50/USD range despite the unresolved US trade challenges.

There was adequate reason to provide at least a 25-basis-point cut, and we believe further rate cuts are needed to take the rate back to the pre-pandemic level.

Seeff says while recent rate cuts have brought relief, the effect on the broader economy has been negligible, evident in the low economic growth rate of just 0.8%.

He notes that despite inflation being lower than it was before the pandemic, the interest rate remains higher.

"This must be addressed to stimulate growth and create much-needed jobs."

While another repo rate cut would have been welcome, today’s decision to hold the prime lending rate steady signals the Reserve Bank’s commitment to bringing inflation closer to the anchor target of 3%, says Bradd Bendall, the national head of sales at BetterBond.

“For homeowners, it means short-term restraint, but also the potential for renewed momentum in the property market once the next cycle of rate cuts begins, hopefully in the months ahead.

"Five repo rate cuts since September last year have already stabilised conditions, and BetterBond’s latest figures show home loan applications are up 14% year-on-year in July and August.”  

The bond originator says house prices are also strengthening, up 2.1% year-on-year, with the average purchase price for first-time buyers reaching a record R1.3 million in July and August. It says deposit requirements have also eased, dropping 5% year-on-year according to BetterBond’s latest data.

“Holding the repo rate steady could lead to a stabilisation of property prices, which, coupled with favourable deposit requirements, could make the market accessible to more buyers. It also sends a strong signal to investors about the Reserve Bank’s focus on stability and long-term economic growth.”

Independent Media Property