Greg Dart
High Street Auction
Director
South Africa’s third consecutive interest rate cut is welcome news for the property sector. Although the prudent easing does not go far enough yet to ease the rising cost of living, it supports rising confidence that South African growth is on an upward trend, buoyed by optimism around the Government of National Unity (GNU).
With interest rates rising by less than expected (3% year-on-year in December), market commentators had widely expected a 25-basis point interest rate cut this Thursday. With further cuts expected later in the year – market forecasts suggest further repo rate cuts of 0.25% to 0.5% for 2025 – the property sector could expect the final rate to settle between 7.25% and 7.5%. We must remain wary of potential external risks, such as the U.S. trade policies and their impact on the rand.
For residential and commercial property in the country, these repo rate cuts will encourage more buyers to invest in South Africa.
Lower interest rates will help make home loans more affordable, potentially encouraging more buyers to enter the market. This increased demand may lead to a boost in property sales and could stimulate price growth in certain areas. However, the extent of this impact will depend on overall economic conditions and consumer confidence.
For the commercial property sector, lower interest rates can ease some financial pressure on businesses by reducing the cost of financing while supporting increased investment and the sector’s recovery. However, the overall impact will depend on broader economic factors and the specific dynamics of the commercial property market.
High Street Auctions is cautiously optimistic that South Africa will see further interest rate relief over the medium term, despite recent reports around friction in the GNU, a slowdown in global growth and rising inflation in major economies.