Positive start to 2025: Reserve Bank cuts Interest Rates by 25bps, Prime Rate now 11%

The Reserve Bank's 25bps interest rate cut, reducing the repo rate to 7.50% and the prime rate to 11%, is positive news. As a result of the 25bps rate cut, mortgage repayments will reduce by:

• R750 000 bond – from R7 869 to R7,741 (thus saving R128)
• R900 000 bond – from R9 443 to R9,290 (thus saving R153)
• R1 000 000 bond – from R10 493 to R10,322 (thus saving R171)R1 500 000 bond – from R15 739 to R15,483 (thus saving R256)
• R2 000 000 bond – from R20 985 to R20,644 (thus saving R341)
• R2 500 000 bond – from R26 231 to R25,805 (thus saving R426)
• R3 000 000 bond – from R31,478 to R30,966 (thus saving R512)
• R5 000 000 bond – from R52,463 to R51,609 (thus saving R854)

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

As usual the property industry weighed in with their views

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Samuel Seeff, Chairman Seeff Property Group

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Seeff, Chairman of Seeff Property Group, believes it’s not enough. He argues that a 50bps cut would have had a more significant impact in stimulating the economy, particularly given the country's economic stagnation and rising unemployment.

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Seeff emphasizes that the focus should shift from inflation control to driving GDP growth and reducing unemployment, which he sees as the greater risks. With inflation already at the lower end of the target range, high interest rates are hampering economic recovery. He advocates for more aggressive rate cuts to provide the necessary stimulus, pointing to historical precedents, like during the COVID-19 pandemic.

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Despite these concerns, Seeff views the rate cut as a boost for the property market, which showed increased sales volumes last year following previous cuts. He sees growth potential, especially in Gauteng and inland provinces, and expects prices to rise once stock levels decrease.

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Greg Dart, CEO of High Street Auctions

Dart welcomed South Africa’s third consecutive interest rate cut, noting its positive impact on property market sentiment. Although the reduction doesn’t fully alleviate rising living costs, it supports growing confidence in the country’s economic recovery, fuelled by optimism surrounding the Government of National Unity (GNU).

With inflation rising less than expected (3% year-on-year in December), the 25bps cut was anticipated, and further rate reductions are expected in 2025, potentially lowering the repo rate to 7.25% to 7.5%. While external risks like U.S. trade policies remain, Dart believes the lower rates will make home loans more affordable, stimulating both residential and commercial property demand.

In the commercial sector, reduced financing costs should ease financial pressures on businesses, encouraging investment. Dart remains cautiously optimistic that South Africa will see further rate relief, supporting both property sales and broader economic recovery despite global uncertainties.

Adrian Goslett, Regional Director and CEO of RE/MAX South Africa

Goslett has welcomed the recent 0.25% interest rate cut, which reduces the repo rate to 7.5% and the prime lending rate to 11%. He believes this adjustment offers much-needed relief for consumers and could positively impact the local property market.

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Goslett notes that the effects of the rate cut will become more apparent in the coming months, following previous reductions in September and November. He also highlights potential risks from global uncertainties, particularly concerning U.S. trade policies under President Trump, which could influence inflation and interest rates in South Africa.

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Despite these concerns, Goslett remains optimistic about the future of the property market. He points to a strong end to 2024, with record-breaking sales of R4.1 billion in December. With this momentum, Goslett sees 2025 as a year full of growth and opportunity for the real estate sector.

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Jonathan Kohler, Founder & CEO of Landsdowne Property group

The 25 basis point interest rate cut is a positive step for the property market, particularly in Johannesburg, where lower rates unlock significant value. The cumulative 75 basis point reduction, which amounts to three quarters of a percent is a meaningful shift. Not only does this improve market sentiment, but it also enhances affordability, potentially sparking an uptick in buying activity.
 
Each interest rate cut improves perceptions of the market and increases people’s willingness to purchase property. These reductions are exactly what Johannesburg needs to see a return of market activity.

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Dr. Andrew Golding, CEO of Pam Golding Property Group

Golding welcomed the recent 25bps repo rate cut, bringing the prime rate to 11%. He noted that this marks the third consecutive rate reduction, totalling 75bps in the current cycle, and is particularly beneficial for homebuyers and those with existing mortgages.

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Golding acknowledged the uncertainty around further rate cuts, with forecasts ranging from no further relief to a possible 25bps cut later in 2025. He pointed out that global economic concerns, including inflation pressures and shifting U.S. interest rate policies, could limit local rate reductions.

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Despite this, sentiment has improved, and the property market is showing signs of recovery. Sales activity, especially among first-time buyers, has increased, with growth in demand in areas like Mpumalanga, Johannesburg, and Gauteng South and East. Investment in buy-to-let properties is also on the rise, particularly in the Western Cape. Golding sees broad-based house price recovery, with national price inflation reaching 5.1% by December 2024.

Chris Tyson, CEO of Tyson Properties

Tyson has welcomed the recent 25bps interest rate cut by the South African Reserve Bank (SARB), bringing the prime rate to 11%. Tyson anticipates further rate cuts in 2025, which he believes will provide significant relief to South African homeowners and stimulate the property market.
Despite a slight uptick in inflation and global economic uncertainty, Tyson is optimistic about a recovery, particularly in Gauteng and KwaZulu-Natal, while the Cape market continues to perform well. He expects the rate to eventually drop to around 7%, boosting buyer and seller confidence. Over the long term, Tyson predicts the market will transition from a buyer’s market to a more balanced one within two years, offering stability and attracting long-term investment.

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Rhys Dyer, CEO of ooba Group

Dyer welcomed the recent 25bps interest rate cut, lowering the repo rate to 7.50% and the prime rate to 11.0%. This marks the third rate cut in six months, with more expected in 2025. Dyer is optimistic about the potential for a cumulative 100bps reduction by year-end, which will support growth in South Africa’s residential property sector.

He highlights a 6.5% increase in the average property purchase price and a record surge in buy-to-let demand, driven by favourable lending conditions. Dyer also notes that Gauteng’s housing market shows signs of recovery, with rising home prices in Q4 2024.

While the global economic outlook remains uncertain, Dyer believes rate cuts will stimulate homebuying and increase investor confidence, forecasting double-digit growth in transactions. He advises prospective buyers to leverage home loan comparison services to secure the best rates and increase approval chances.

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