Property industry leaders on Thursday said the decision will increase monthly bond repayments for homeowners and prospective buyers already battling rising fuel prices and higher living costs.
Image: Karen Sandison | Independent Newspapers
South Africa’s residential property sector is expected to come under renewed pressure following the SA Reserve Bank’s decision to raise interest rates by 25 basis points, with property groups warning that higher borrowing costs will squeeze household finances and slow market momentum.
The increase pushed the repo rate to 7% and the prime lending rate to 10.5%, following a rise in inflation, with the Consumer Price Index (CPI) climbing to 4% in April — the highest level recorded since August 2024.
Property industry leaders on Thursday said the decision will increase monthly bond repayments for homeowners and prospective buyers already battling rising fuel prices and higher living costs.
Stephen Whitcombe, managing director of the FIRZT Property Group, said the increase highlighted the importance of careful financial planning for buyers entering the market.
“For homeowners with a 20-year bond of R1 million, the 0.25% increase translates into an approximate monthly repayment increase of around R165 to R175, while a R2m bond could see repayments rise by roughly R330 to R350 per month,” he said.
REMAX Southern Africa CEO and regional director, Adrian Goslett, said the higher borrowing costs would place additional strain on consumers, but added that the local property market had historically proven resilient during shifting interest rate cycles.
“Higher interest rates will naturally influence buyer affordability and may result in consumers approaching property decisions with even more caution; however, the South African property market remains underpinned by long-term demand as property is viewed as a stable investment,” he said.
Goslett added that buyers would likely delay some purchasing decisions and reassess budgets, but said demand for residential property was expected to remain resilient over time.
Samuel Seeff, chairman of the Seeff Property Group, criticised the Reserve Bank’s decision, describing it as premature and damaging to both the economy and the property sector.
“The hike will unnecessarily penalise consumers and hamper economic recovery for what is clearly a temporary spike in inflation, driven by external factors rather than domestic overspending,” he said.
Seeff added that consumers were already struggling under the burden of elevated borrowing costs, fuel price increases and higher living expenses. He also noted that the property market had lost some momentum after expectations of a January rate cut failed to materialise.
“Consumers and the economy are already struggling under the weight of high interest rates and the burden of fuel price hikes and other cost increases,” he said. “Overall, he says, “despite the rate cuts over the last two years, the market remains around 20% below the 2021/2 highs.”
Dr Andrew Golding, CEO of the Pam Golding Property Group, said the latest increase was unlikely to derail the housing market in the immediate term, although it would add pressure to household budgets.
“Prime lending rates (now 10.5% vs repo rate of 7%) remain broadly in line with levels seen between 2016 and 2019, making the latest hike more of a moderate adjustment than a major tightening of financial conditions,” he said.
Herschel Jawitz, CEO of Jawitz Properties, described the rate increase as an unwelcome surprise for consumers already grappling with rising fuel costs.
“Now consumers are faced with high fuel costs and higher interest rates within the space of three months. Despite the ‘cost shock’, the impact on the residential market is expected to be marginal.”
Berry Everitt, CEO of the Chas Everitt International property group, cautioned prospective buyers against delaying purchases in anticipation of future interest rate cuts.
“Many people think they should simply wait for rates to come down before buying, but that could be a costly mistake. We are already seeing stock shortages beginning to emerge in several areas of the market, and that is placing upward pressure on prices,” he said.
Unisa economist Dr Eliphas Ndou aid he was surprised by the decision and warned that it would offset consumer relief measures introduced by government.
“The latest interest rate decision, triggered partly by external supply-side inflation, will lead to a persistently low economic growth environment that cannot create jobs at a time when unemployment is high,” he said.
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