Last week the South African Reserve Bank increased the repo rate by 25 basis points to 7%, bringing the prime lending rate to 10.50%.
The increase is not the outcome the property market had hoped for according to Seeff, chairman of the Seeff Property Group, adding that the increase will hopefully prove temporary.
The rate adjustment has come as a measured response by the SARB to help anchor inflation. It will, however, have a knock-on effect on home loan and other debt repayments. Home loans of between R1 million and R3 million will now cost around R165 to R496 more per month.
This rate hike again highlights that the property market has always moved through cycles, and interest rate fluctuations always highlight the need to factor in possible rate hikes, says Seeff. Home owners with mortgage bonds and prospective buyers will need to adjust their budgets.
Despite this rate hike, the prime rate of 10.50% is, however, still at the lowest level in two years, and he says homeownership is still relatively accessible. The market continues to offer worthwhile opportunities across the board.
Buyers:
For buyers, property remains more affordable compared to two years ago, especially in areas where price growth has been low over the last three years. Buyers are also still benefiting from a favourable home loan environment with high approval rates and lower deposit requirements. Qualifying buyers can also still secure rate concessions.
Buyers who need to adjust their buying criteria could consider lowering their target price range slightly to create a financial buffer. Securing pre-qualification before starting the property search will provide a more accurate picture of purchasing power at the 10.50% prime rate. A larger cash deposit can also help offset higher monthly repayments.
Sellers:
For sellers, a shift in the market usually means that accurate pricing becomes even more important. Sellers should align asking prices with realistic market values rather than speculative expectations. In most areas, well-priced properties are selling faster as they continue attracting qualified buyers who are ready to act. This shows that drawing these buyers early reduces the time on the market and the risk of later price reductions.
Rental demand also tends to strengthen during rate-hike cycles as some would-be buyers delay their purchases. Landlords need to balance higher bond repayments with tenant retention. Keeping rental increases market-related supports stable, long-term income. Prospective tenants, meanwhile, may need to adjust their budgets slightly for possible rental adjustments, and should always prioritise maintaining a good credit record.
According to Leonard Kondowe, National Manager at Rawson Finance, the answer is to budget with purpose.
READ: The first-time homebuyer's guide to budgeting for maintenance and repairs
“It doesn’t matter what your property goal is – a deposit, bond savings, or renovations – the key is consistency,” says Kondowe. “Small, smart changes to your monthly routine can make a big impact over time.”
Here are Kondowe’s top five budgeting tips to help South African households move closer to their property dreams.
Try the 50/30/20 rule
The 50/30/20 budgeting rule is a simple and effective way to take control of your finances:
- 50% of your income should go to essential needs like food, housing, and transport.
- 30% is for wants – those little luxuries and lifestyle spends.
- 20% goes straight to savings – including your property deposit or bond prepayment fund.
“Applying this kind of structure to your monthly budget makes sure you’re always building towards something meaningful,” says Kondowe. “Even if it’s just a few hundred rand a month, consistently putting money away gets you closer to your goal.”
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