As South Africa awaits the Monetary Policy Committee’s (MPC) interest rate decision this week, property experts agree that the country is well-positioned for a meaningful rate cut - one that could stimulate the economy and offer welcome relief to homeowners.
READ: Gauteng’s hottest investment suburbs
“The economy and property market need a rate cut now”
Samuel Seeff, chairman of the Seeff Property Group, has urged the Reserve Bank to deliver a meaningful rate cut of at least 50bps, saying there is “no reason to delay it any further.”
According to Seeff, several positive economic developments support an immediate cut. These include South Africa’s exit from the Grey List, an S&P credit rating upgrade to BB - the first in 20 years, positive employment data and an improved growth outlook.
READ: Cape heritage homes: A hot investment for hospitality and lifestyle buyers
“While the 1.2% expected growth outlook remains weak, it is nonetheless an improvement over last year, but can only improve with further economic stimulation including a rate cut,” says Seeff.
He adds that although the bank plans to lower the inflation target over the next two years, the current interest rate “is still about 50bps too high” and continues to hinder both the property market and consumer spending.
Strong economic indicators support an immediate cut
Seeff points to exceptionally favourable conditions for a rate cut:
-
Inflation is at a historic low of around 3.2%, the lowest (excluding anomalies) since the mid-1990s.
-
Inflation also sits comfortably within the Bank’s proposed new 2–4% target range.
-
The rand has been relatively stable, trading below R18 to the dollar for much of the year.
Despite these strong fundamentals, the Reserve Bank has delivered only three rate cuts this year, with the last in July. “The Bank has missed the last two opportunities,” Seeff argues. “Notably, the US Federal Reserve has made two cuts since mid-year totalling 50bps.”
On the property front, Seeff notes that while activity has improved somewhat following earlier cuts, it is still far from optimal because rates remain higher than necessary. Average house price growth is around 5%, except in the more robust Western Cape market.
READ: Why South Africans are choosing lifestyle towns over big cities
A further cut would “immediately lower the cost of borrowing and inject more money back into consumer wallets,” he says. “It will improve property affordability and stimulate activity.”
See what you can afford - try the Property24 Home Loan Affordability Calculator.
Seeff says: “We believe there is every reason to expect a rate cut of at least 25bps, although a 50bps reduction would provide a much stronger injection into the economy.”
A cut could offer the relief your bond has been waiting for
Bradd Bendall, BetterBond’s National Head of Sales, says homeowners and buyers can be optimistic as the MPC meets this week. A stronger rand, inflation nearing target, and a possible drop in the prime lending rate all set the stage for positive momentum.
Multiple rate cuts since November last year have already shaved 125bps off the interest rate, making home loans more affordable. On a R2 million bond, homeowners are currently paying over R1 000 less per month than they did when prime was 11.25%.
Should prime drop again this month - possibly to 10.25% - homeowners would save an additional R300 per month on a 20-year bond.
READ: MTBPS signals growth ahead for SA’s property market
Market confidence is rising - and first-time buyers are returning
While analysts are divided on the timing of the next cut - with some expecting a final 2025 reduction and others predicting a delay until early 2026 - Bendall says homeowners can take comfort in the current stability of the market.
BetterBond data shows:
-
The buyers’ market range is narrowing.
-
The Construction Input Price Index (CIPI) continues to fall.
-
The Residential Property Price Index (RPPI) is rising.
These trends signal growing confidence and activity. South Africa’s removal from the FATF grey list should further strengthen the rand and improve investor sentiment.
READ: Coastal charm: Stunning beach homes from R865k
Bendall says home loan activity is increasing strongly:
“Application volumes are 26% higher than in 2023, with a 14.6% year-on-year increase.”
First-time buyers are also resurging. The average deposit required dropped sharply to 21%, and FNB reports that first-time buyers made up 30% of all transactions in Q3 - up from 26% the previous quarter.
Home prices reflect strong resilience
House price inflation continues to show resilience:
-
Average home prices have risen 10.7% over the past six years.
-
Prices for all buyers have breached R1.6 million.
-
First-time buyers are paying an average of R1.3 million.
“These indicators reflect improving confidence and elevated expectations,” Bendall says. “The property market is poised for a strong finish to the year.”
A strong foundation heading into 2026
Lower inflation, a stronger rand and renewed lending confidence are creating ideal conditions for homeowners and buyers. Even if the MPC holds steady this week, the groundwork has been laid for sustained growth into 2026.
“All indicators suggest that the property market is poised for a strong finish to the year,” says Bendall. “Regardless of the outcome of the MPC meeting, a solid foundation has been laid for sustained growth into 2026.”
Want all the latest property news and curated hot property listings sent directly to your inbox? Register for Property24’s Hot Properties, Lifestyle and Weekly Property Trends newsletters or follow us on Twitter, Instagram or Facebook.
