Real estate groups say buyers should not delay entering the property market despite renewed pressure from rising interest rates and living costs.
Image: Ayanda Ndamane/ Independent Media
South Africa’s residential property sector has warned consumers to focus on affordability and financial resilience after the South African Reserve Bank (Sarb) increased the repo rate by 25 basis points, pushing the prime lending rate to 10.5%.
While the hike is expected to place additional strain on household finances already under pressure from rising fuel prices, electricity tariffs and broader inflationary pressures, industry leaders say the property market remains more resilient than many expected.
Berry Everitt, CEO of the Chas Everitt International property group, said the increase should serve as a reminder for buyers to purchase well within their means.
“The fact is that they are not only facing slightly higher borrowing costs, but also contending with rising fuel and food prices, the municipal rates and utility tariff increases to be implemented in July and broader inflationary pressures that are affecting almost every other area of household expenditure,” said Everitt.
He added that many buyers make the mistake of borrowing the maximum amount banks are willing to approve.
“The smartest buyers in this market are stress testing their finances and asking themselves: could we still comfortably afford this home if or when rates rise again, fuel and food becomes even more expensive and municipal bills increase?”
Everitt cautioned against delaying homeownership indefinitely in the hope that interest rates may decline in the future.
“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.
According to Everitt, many first time buyers may need to adjust expectations by considering smaller properties or more affordable suburbs as household debt levels remain elevated.
“The overall advice is not to hold back, but to buy smart, buy conservatively and make sure your home still works for your budget even if economic conditions become more difficult over the next 12 months,” he said.
At Standard Bank, Head of Home Services Toni Anderson said the latest increase comes at a difficult time for consumers, although the broader rate environment remains more favourable than previous years following six consecutive cuts since July 2024.
“While this hike will disappoint many homeowners and people looking to buy property, earlier rate cuts have already made homes more affordable for many consumers,” Anderson said.
“Looking ahead, we expect the property market to remain resilient. Buyers and homeowners have some breathing room from earlier rate cuts, but they will need to budget carefully as cost pressures persist.”
Bradd Bendall, National Head of Sales at BetterBond, said the rate increase reflects mounting geopolitical and inflationary pressures linked to global instability and rising fuel prices.
“Despite the higher interest rate environment, the housing market has continued to show resilience,” Bendall said.
“We have seen steady growth in bond applications, with a year on year increase of 6.2%, while home prices for both first time and repeat buyers have reached record highs.”
He noted that first time buyers may face increasing affordability pressure but said opportunities still exist through new developments and properties priced below the transfer duty threshold.
Dr Andrew Golding, chief executive of the Pam Golding Property Group, said the latest increase should be viewed as a moderate adjustment rather than a major tightening cycle.
“While higher borrowing costs will add to already strained household budgets, the hike is modest and unlikely to derail market activity in South Africa’s resilient residential property market in the short term,” Golding said.
He added that affordability pressures and transport costs are increasingly shaping buyer behaviour.
“There is growing demand for smaller, well located properties close to workplaces, schools, retail amenities and public transport,” he said.
Golding pointed to areas such as Claremont, the Cape Town CBD and Rosebank as examples where compact, convenient living continues to attract buyers.
Not everyone in the industry supported the Reserve Bank’s decision.
Samuel Seeff, chairman of the Seeff Property Group, described the increase as premature and damaging to economic recovery.
“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,” Seeff said.
He warned that higher borrowing costs could further weaken buyer confidence and place additional pressure on first time buyers already struggling with affordability.
“Economic stability and growth must be prioritised and facilitated wherever possible,” he said.
Despite criticism of the decision, Seeff acknowledged that the property market continues to offer opportunities for buyers and investors, particularly given supportive lending conditions and relatively strong bond approval rates.
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