According to many professionals in the property sector, the start of 2025 has indicated a strong improvement in the appetite for property ownership in
According to many professionals in the property sector, the start of 2025 has indicated a strong improvement in the appetite for property ownership in the South African market. Property Marketing expert and Rainmaker Marketing’s Director, Stefan Botha, shares how this latest announcement by the South African Reserve Bank to further reduce the country’s interest rate by 0.25% is only going to stimulate the appetite and opportunity for first time buyers and investors to capitalise on the property market.
With this latest interest rate announcement marking the second decrease in three months, we have observed a significant increase in buyer appetite and interest with each reduction, as well as the unlocking of substantial land parcels in key areas across South Africa. More broadly, the positive economic impact of property development in terms of job creation, SMME growth and community upliftment, has also contributed to the shift in market sentiment we are currently witnessing.
With the repo rate now at 7.5%, I believe this sustained momentum will further drive the property market, setting the stage for a strong 2025 across various sectors and regions in South Africa.
The proof is in the pudding
With interest rates being largely defined by our countries inflationary targets and global macro influences, reductions have a significant impact on the market. They enhance affordability, boost sentiment and we’re witnessing the strongest buyer confidence in years across key property regions. For investors or those looking to enter the market, declining rates and a market poised for growth present the perfect opportunity to capitalize on capital appreciation.
From December into the month of January 2025 we have seen a considerable upswing in sales by consumers with reports from real estate developers like Devmco Group and developments like Seaton, BlackBrick Umhlanga and others reporting higher than expected sales figures. The strong collaboration between key players in the development sector and government to unlock catalytic projects is also promising, particularly in the Western Cape with The Bridge in Stellenbosch and in KwaZulu-Natal with Sibaya Precinct and Club Med on the North Coast.
A glo-cal perspective
The Government of National Unity (GNU) and the ongoing suspension of load shedding have seemingly contributed towards the fundamental stability we are seeing within the country. However, US and international foreign policies being implemented do tend to have an influence along with other external factors that can shape what happens in the coming months and year ahead. Headline inflation has remained at the bottom of the inflation target band, supported by positive base effects and demand-driven pressures remaining contained. This trend is expected to remain intact until the second quarter, but further reductions in the interest rate for the year do have a slight underlying of caution amid an uncertain global environment. Ultimately, South African growth, which is on an uptrend, will rely heavily on structural reform implementation.
In light of this, while the interest rate cut is a positive development, it is important to balance this sentiment with a realistic view of South Africa’s broader economic challenges. Structural issues such as high unemployment, rising labour costs and sluggish productivity remain stubborn barriers to sustained growth.
What does this all mean for the average property owner
For South African consumers, especially those carrying debt such as home loans, car finance, and credit card repayments, the interest rate reduction provides much-needed relief. Over the past two years, the cost of borrowing has risen steadily, placing enormous pressure on households. Middle-class homeowners have felt this burden acutely, with some experiencing bond repayment increases of an additional few thousands per month. Now, with rates on the decline, there is a tangible easing of financial strain, offering many the chance to recalibrate their finances.
For instance, if one had to look at buying a property worth R2 million at the previous interest rate of 11.25%, your monthly repayment on a 20-year home loan with no deposit would be around R20,985.00. With the latest interest rate drop to 11%, your monthly repayment would decrease to about R20,644.00 – saving you just over R4,000.00 annually.
In short, with inflation easing South Africans can expect more disposable income and we are already seeing a resurgence in consumer confidence. This renewed confidence is a crucial driver for sectors such as retail, automotive and especially property, where affordability has been a growing concern in recent years.
What hope 2025 brings
South Africa’s inflation is not quite aligned or at its lowest yet, which does prime itself for further interest rate decreases during 2025. While timelines are unknown, SARB governor Lesetja Kganyago, was quoted as saying in yesterday’s announcement that inflation is likely to remain in the bottom half of our target range through the first half of this year, but headline inflation should revert to around 4.5% thereafter, aided by core inflation which remains at or below the midpoint over the forecast horizon.
We are anticipating the next interest rate cut to only being announced mid-year in 2025 but even that is positive for savvy investors wanting to build their wealth creation and expand on their property portfolios in the interim. By staying informed and proactive, South Africans can navigate this evolving landscape with confidence and capitalize on the opportunities ahead.
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