Interest Rates Cut by 0.25%: Real Estate Industry Reactions

The Monetary Policy Committee (MPC) has announced a 0.25% reduction in interest rates, lowering the repo rate to 7.75% and the prime lending rate to 11.25%.

While this news is seen as positive, many in the real estate sector expressed disappointment over the modest cut. South Africa, which was one of the first countries to raise rates following the pandemic, has been notably slower in reducing them.

Bond mortgage repayments will reduce by the following:

R750 000 bond – from R7 998 to R7 869 – thus saving R129

R900 000 bond – from R9 598 to R9 443 – thus saving R155

R1 000 000 bond – from R10 664 to R10 493 – thus saving R171

R1 500 000 bond – from R15 996 to R15 739 – thus saving R257

R2 000 000 bond – from R21 329 to R20 985 – thus saving R344

R2 500 000 bond – from R26 661 to R26 231 – thus saving R430

*Based on a 20-year repayment period at the prime rate

Adrian Goslett - RE/MAX Southern Africa

Adrian Goslett, Regional Director and CEO of RE/MAX Southern Africa, believes that the recent interest rate cut is well-timed, setting the stage for more favourable market conditions in the coming months.

“Interest rate cuts typically take a few months to impact the market, and this additional cut, following September's reduction, should help stimulate activity in the property sector,” says Goslett.

While the Western Cape has remained relatively unaffected by high interest rates, the rest of the country has seen slow property market conditions. Goslett is optimistic that these cuts will stimulate the market nationwide.

He advises buyers, sellers, tenants, and landlords to rely on the guidance of trusted real estate professionals now more than ever. “As property market conditions evolve, timely advice from a real estate agent is crucial. Gaining insights early will help clients navigate any challenges ahead,” he concludes.

Samuel Seeff - Seeff Property Group

Samuel Seeff, Chairman of the Seeff Property Group, welcomed the Reserve Bank’s 25 basis point cut to the repo rate, bringing it to 7.75% and the prime rate to 11.25%. While this marks the second consecutive cut this year, Seeff believes the reduction is insufficient to provide a significant economic boost.

With inflation falling to 2.8%, well below the target range of 3%-6%, Seeff argues that the Bank missed an opportunity for a more impactful 50bps cut, especially as inflation is at its lowest since the pandemic and below pre-pandemic levels.

While the interest rate reduction is expected to energize the housing market, Seeff emphasizes that more cuts are needed to drive economic growth and create jobs. Positive factors, such as lower inflation, the potential benefits of the Government of National Unity (GNU), and the absence of load shedding, contribute to an optimistic outlook for both the economy and the property market. However, Seeff believes further cuts are essential.

Looking ahead to 2025, Seeff predicts a rebound in the residential property market, with increased demand and higher turnover in areas that have been stagnant, such as Gauteng, Gqeberha, and Mpumalanga. Prices, however, will rise only once stock levels are reduced, with some regions, like the Western Cape, expected to see price growth of up to 15%-20%.

Dr Andrew Golding - Pam Golding Property Group

Dr. Andrew Golding, CEO of Pam Golding Property Group, expressed optimism about the housing market following a 25bps repo rate cut, bringing the prime rate to 11.25%. With consumer inflation dropping to 2.8% in October 2024,

Golding anticipates further rate cuts to stimulate market activity, particularly among first-time homebuyers, who have already shown positive responses to the September cut. Lower interest rates make homeownership more affordable, attracting both first-time buyers and those looking to move for retirement or downsizing.

Golding highlighted increased demand in Gauteng, where house prices have been under pressure, driven by improved affordability. Regions with high first-time buyer activity, such as Free State, Mpumalanga, and Gauteng South and East, are expected to see further benefits as more young adults shift from renting to buying.

Additionally, broader economic factors, including the formation of the Government of National Unity (GNU) and successive petrol price cuts, have eased financial pressures on households and bolstered market sentiment. Golding also anticipates around 100bps of additional interest rate cuts in 2025, reinforcing the positive outlook for the housing market. The combination of lower rates, improving affordability, and easing inflation is set to fuel continued market recovery.

Chris Tyson- Tyson Properties

Chris Tyson, CEO of Tyson Properties, welcomed the 25bps interest rate cut to 7.75% but urged homeowners to remain cautious as 2025 approaches. He expects further rate cuts in the first half of next year, but advises consumers to focus on reducing debt and continuing to pay down their home loans at the same rate. By doing so, homeowners can reduce their loan balance more quickly without attracting tax on the savings.

Tyson explained that the latest rate cuts would lower monthly repayments for bonds, with homeowners seeing small but meaningful reductions over time. For example, a R1 million loan would see a R171 reduction, and R344 on a R2 million bond. He emphasized that consumers should always budget for the highest interest rate and use any savings from rate cuts to strengthen their financial position.

While the interest rate cycle may boost the property market, Tyson cautioned that uncertainties remain, including inflation pressures and external factors like the rising dollar and petrol prices. He recommended that buyers carefully consider factors like location, work-from-home options, and homes with energy-saving features to manage future costs. Tyson also cautioned against purchasing expensive properties when rates are low, as this can lead to financial losses when rates increase.

Leonard Kondowe, Rawson Finance’s National Manager

Leonard Kondowe, National Manager of Rawson Finance, welcomed the South African Reserve Bank’s 25bps interest rate cut, reducing the prime lending rate to 11.25%. While the cut may seem small, it offers relief for homeowners, making debt more manageable as the festive season approaches. Kondowe emphasized that inflation and global factors like fuel prices and political tensions influence interest rate decisions. Despite inflation being within the SARB’s target, Kondowe urged caution, as market conditions could shift unexpectedly.

The rate cut will ease monthly repayments for home loans, vehicle finance, and other debts, offering consumers extra disposable income. However, Kondowe advised against spending the savings, recommending that homeowners continue to pay the same amount towards their debt to reduce principal faster. This will not only save on interest but also build financial security.

Kondowe is optimistic about the property market, noting a record number of bond applications and an expected increase in buyer activity, particularly among renters transitioning to homeownership. With improved affordability, default rates may also decrease, benefiting the economy. He cautioned sellers against overpricing properties, advising consultation with real estate professionals. Overall, Kondowe sees this rate cut as a step towards economic stability, urging consumers to manage debt carefully and stay financially aware.

Rhys Dyer – CEO of ooba Group

Rhys Dyer, CEO of ooba Group, welcomed the South African Reserve Bank’s (SARB) 25 basis point repo rate cut, which lowers the prime lending rate to 11.25%. This is the second rate cut for 2024, and Dyer believes it will further stimulate the housing market, which had been subdued by high interest rates. The reduction, combined with a positive inflation outlook, is expected to benefit homeowners and prospective buyers. Consumer inflation eased to 3.8%, and producer inflation dropped to 1.0%, reinforcing optimism about the economic outlook.

Dyer highlighted that ooba Home Loans saw a 16% rise in home loan applications in October 2024 compared to the previous year, with the first-time buyer segment showing strong growth. The total 50 basis point rate cut this year equates to significant savings, which will likely drive market recovery.

Dyer urged homeowners to use the savings from lower rates to pay down their bonds faster. He shared tips for accelerating bond repayments, such as allocating extra funds, using raises or bonuses, and applying lump sums to reduce interest. He remains optimistic about further rate cuts in 2025, driven by an improved local economic outlook despite global uncertainties.