Good news for homeowners in South Africa
South African homeowners are expected to save money in 2025, with interest rate cuts, positive economic indicators, real property value growth, and increased bank support spelling good news for buyers and investors alike.
In addition, areas like Gauteng and the Cape are expected to see higher prices and demand this year.
South African homeowners have been through a rough few years, as the Reserve Bank embarked on a hiking cycle in 2021, which saw interest rates rise by 475 basis points.
South Africans went from some of the lowest recorded rates in the country’s history during the Covid-19 pandemic to interest rates at 15-year highs.
This saw homeowners paying significantly more on their home loan repayments every month. Combined with a signficantly higher cost of living, high inflation and slow economic growth, South Africans have been under significant pressure.
However, the tides turned in 2024, as the Reserve Bank’s Monetary Policy Committee (MPC) decided to cut interest rates for the first time in years in September 2024.
The MPC cut rates by 25 basis points at its September meeting, then announced another 25 basis point cut in November.
Experts widely anticipate another 25-point cut at the MPC’s first meeting for 2025, which will take place on Thursday, 30 January.
Daily Investor reached out to three of South Africa’s top real estate firms on what homeowners can expect in 2025.
Seeff Property Group, Pam Golding, and Real Estate Services were in agreement that 2025 is set to be a positive year for homeowners, provided that the Reserve Bank’s cutting cycle continues and the economy improves.
Below is an overview of what these three firms believe South Africans can expect in 2025.
Seeff Property Group
Seeff Property Group chairman Samuel Seeff expects rate cuts, higher GDP growth, and contained inflation in 2025.
He said the Seeff Group believes the economy and property market is poised for growth this year.
The latter part of 2024 was characterised by inflation reducing notably, and while GDP figures for the third quarter of 2024 disappointed, the group remains optimistic that the economy will perform better this year.
He said that, with no economic shocks anticipated at this stage, there is every reason to expect at least two rate cuts, kicking off at the end of this month.
“Another rate cut this month should be just the kickstart that the property market needs to boost higher sales volume,” he said.
However, Seeff added that more robust rate cuts are needed to stimulate economic growth and ease the burden on consumers and businesses.
“We would also like to see more growth-focused initiatives from the GNU government rather than the populist politicking which characterised most of last year,” he said.
He said Seeff potentially sees the market as rerating in terms of areas which have struggled last year starting a turnaround this year, in particular areas such as Gauteng and the inland areas.
In turn, higher demand and volumes could potentially see prices picking up this year from the dismal performance last year.
He added that the Cape property market will likely continue to lead nationally with sustained demand, possibly ticking up further, especially over the busier summer months. With that higher demand, prices will continue rising.
“The advice for consumers is, as always, that the sooner they buy property, the better,” he said.
“While prices have flattened in Gauteng, for example, the upside is that it presents an excellent opportunity for buyers. In the Cap,e too, the longer you leave it, the more you will have to pay.”
He explained that the market has been very rewarding for property investors, especially in the rentals sector where the Cape seems to have had among the lowest vacancy rates.
“There is opportunity in the market, and those who are financially able to purchase property should do so,” he said.
“If you are unable to afford it on your own, there are other ways that you can still purchase, for example, with your spouse or partner, siblings and so on.”
Seeff said that, aside from making property more affordable, rate cuts will also reduce household debt servicing costs, including current home loan repayments.
“A more robust property market will generate more income in the economy and government revenue in the form of property taxes and will encourage more development in the market as well,” he said.
Pam Golding
Pam Golding CEO Dr Andrew Golding said that, with inflation currently well below the lower end of the 3% to 6% target range and electricity supply seemingly under control, the economic outlook for 2025 appears increasingly positive.
He said a further 25 basis point rate cut is most likely on the cards for January 2025.
“Positively, although the Reserve Bank remains cautious in the light of upside risks to the inflation outlook, the MPC is expected to reduce interest rates by a further 75 basis points in 2025,” he said.
However, he noted that the timing of the cuts is likely to be influenced by developments internationally, with factors like the oil price, rand and US trade tariffs set to impact this.
“Sentiment in general has improved, which, together with the two recent repo rate cuts of a cumulative 50 basis points in 2024, already creating a ripple effect across the residential property market,” he said.
He said these factors have already seen an increasing uptake, particularly in the lower to middle sectors of the market, while also boosting confidence and activity in the luxury market.
“From a Pam Golding Properties perspective, this is borne out by the fact that November 2024 has proven a busy month, with our group sales 19% ahead of transactions successfully concluded in November 2023.”
“Furthermore, the banks continue to support the market with competitively priced loans, lower deposits and elevated approval rates.”
He added that investors and homeowners will be buoyed by the fact that, according to the Pam Golding Residential Property Index, house price inflation in October 2024 of 5.0% translates into real growth in HPI of 2.2%.
“This means we have seen two consecutive months in which national HPI has exceeded the national consumer price inflation rate, as in September 2024, HPI was 4.7% vs CPI of 3.8%, thereby reflecting real growth in HPI of 0.9%.”
“This augurs well for continued demand for residential property among investment buyers, primarily driven by the Western Cape but also with a meaningful increase in investment demand in the Eastern Cape since mid-2023 and, more recently, in Tshwane.”
Real Estate Services
Director and Shareholder at Real Estate Services, Carrol Dell, said South Africa’s interest rates have been under pressure in recent years, primarily due to inflationary concerns and global economic factors.
This has included high local inflation, rising energy and food prices globally, the war in Ukraine and supply chain disruptions.
In addition, the South African economy has faced challenges such as high unemployment rates, slow GDP growth, and a strained energy sector.
“These factors made it difficult for the SARB to reduce rates to stimulate growth while keeping inflation in check,” she explained.
In addition, the Reserve Bank’s decision-making is also influenced by global trends, especially those in major economies like the US, the EU, and China.
Over the past few years, central banks in these regions have raised rates, creating ripple effects globally.
Dell said that while some analysts had hoped for rate cuts in 2024 as inflation started to ease, the SARB has remained cautious.
“The potential for rate cuts in 2025 depends largely on whether inflation continues to decrease and economic conditions improve,” she said.
If inflation stabilises and economic growth picks up, the SARB could potentially lower rates in 2025.
“However, a lot will depend on both domestic and global factors such as commodity prices, energy stability, and currency strength,” she warned.
“In short, South Africa’s interest rates have been high in recent years to curb inflation, and while the possibility of cuts exists, economic conditions will dictate whether this happens in 2025.”
“For now, rates remain elevated, and most experts believe they will stay at current levels until inflation shows clearer signs of long-term control.”
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