Interest rate cut, a significant sentiment for the property market, especially in Jo’burg

Landsdowne Property Group, one of South Africa’s largest residential real estate managers and agencies, has welcomed the 25 basis point interest rate cut, viewing it as a significant positive shift in market sentiment for the property market, especially the Johannesburg market that needs rejuvenation.
 
Jonathan Kohler, Founder and CEO of Landsdowne, commented:
 
“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 per cent, 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 market perceptions and increases people’s willingness to purchase property. These reductions are exactly what Johannesburg needs to see a return of market activity.”
 
Kohler said now is an ideal time to buy property. When the Reserve Bank of South Africa (SARB) began raising interest rates, many adopted a ‘wait-and-see’ approach, hoping for signs of recovery in the Johannesburg property market before purchasing.
 
However, Kohler advises that those waiting to buy in Johannesburg should act now. Delaying too long could mean missing the opportunity as the market picks up and recovers. Buyers may face higher prices as the market strengthens but will benefit from increased activity.
 
“The rate cut is particularly significant for first-time buyers who have been weighing the cost of renting against bond repayments for owning property. With interest rates continuing to fall, rental prices are becoming increasingly comparable to bond payments, making ownership a more appealing option.”
 
Kohler said this trend is particularly noticeable with one-bedroom or studio apartments, where lower levies, rates, and taxes contribute to a shift from a renters’ market to a buyers’ market. As interest rates continue to decrease, their affordability improves and they will find better value in Johannesburg. The reduced interest rates are especially beneficial for buyers at the lower end of the market.
 
“There is currently stability in the commercial property sector, which often leads the way in recovering from a downturn. As a result, we can expect to see a revitalisation of the residential property sector in due course.”
 
The table below demonstrates the impact of various interest rate cuts on a R1 million home loan bonded over 20 years.