The latest interest rate cut could mark a turning point for South Africa’s residential property market. The South African Reserve Bank has reduced the repo rate by another 25 basis points, bringing the prime lending rate down to 11%.
This is the third rate cut since September 2024, and the first time the prime lending rate has been at this level since May 2023.
The two rate cuts introduced at the end of 2024 appear to have already sparked some recovery in residential property activity. Standard Bank observed a notable increase in home loan applications between Q3 and Q4 2024, reflecting improving buyer sentiment. This, combined with better economic outlooks, has encouraged sellers to price properties more competitively and motivated buyers to take action in select regions.
For example, Johannesburg’s housing market, which endured price declines throughout 2023, is showing signs of stabilisation. The combination of easing consumer inflation and the latest rate cut – with an additional 25 basis points reduction anticipated in March – could drive real-term house price growth in 2025. With affordability improving, this cut is expected to create a more favourable borrowing environment, providing buyers and sellers an opportunity to lock in benefits before rates stabilise.
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