Rhys Dyer
ooba Group
CEO
The recent announcement of a 25-basis point rate reduction signals another milestone for the residential property sector, decreasing the repo and prime lending rates to 7.25% and 10.75%, respectively, and representing the fourth rate cut since September 2024.
This news augurs well for both homeowners and prospective buyers and is poised to boost activity in a property market that is steadily regaining momentum.
Rhys Dyer, CEO of the ooba Group, commends the South African Reserve Bank (SARB) for its decision. “The SARB has taken the correct decision to lower rates which will support consumers and the industry at large, and we have no doubt that this rate cut will make a big impact.”
Some of the key factors that drove the decision
Dyer unpacks a few key reasons for the rate cut as follows: “The latest headline consumer price index (CPI) figure for April edged up slightly to 2.8% from 2.7%, but remains below the 3% lower limit of the Reserve Bank’s inflation target range,” he says. “The increase was largely attributed to higher food prices, which were offset by the continued easing of fuel prices, which declined by 13.4% from year-earlier levels (as per StatsSA).”
This is further bolstered by the positive market sentiment following last week’s Budget Speech. “The Budget Speech represented a collective compromise between the parties, signalling a more unified GNU that is committed to working cooperatively,” says Dyer. “One of the key Budget takeaways that will help boost investor confidence in the property sector is the government’s joint commitment to review spending in an effort to stabilise its debt levels.”
New homebuyers can also look forward to welcome savings, thanks to the official announcement of an unchanged VAT rate and the raising of the property transfer duty exemption threshold by 10%. This adjustment means that any properties purchased below the R1.21 million mark are exempt from paying transfer duties, with all subsequent tiers also increasing by 10%.
Local homebuying market remains resilient
The market continues to respond positively to the stable interest rate environment and the supportive lending practices of the country’s major banks as they compete for market share.
“In April, our national average purchase price rose to R1.67 million – a year-to-date increase of 4.2%,” says Dyer.
ooba’s Index Activity, which closely tracks Deeds Office sales data, experienced a modest rebound in April from a December ’24 low as household finances continued to improve due to petrol price cuts, modest interest rate reductions, and subdued price pressures.
We also recorded our most competitive interest rate since 2022 at prime less 0.65% in April—a key indicator of the banks’ willingness to compete for home loan business and bolster activity.
Adding to the momentum is the increase in the loan-to-value (LTV) ratio among both first- and second-time homebuyers. “As per ooba Home Loan’s data, both the average and first-time LTV ratios were up by 1% year-to-date at 85.1% and 90% in Q1 ‘25.”
Dyer does, however, note that this interest rate cut was necessary to rekindle activity levels among first-time homebuyers, in particular. “First-time homebuyers are known to be typically rate-sensitive. Our latest data highlights that the recovery in activity in this key segment, triggered by initial interest rate relief, has now stalled at around 46.5% of the applications received in recent months. Following this rate cut, it will be interesting to see if the segment regains strength over the next few months.”
Looking ahead, Dyer remains optimistic. “With competitive interest rates, a supportive fiscal environment and growing investor confidence, South Africa’s property market appears well-positioned for steady growth.”