South African property CEOs share bad news about interest rates

South African property CEOs have welcomed the recent interest rate cut by the South African Reserve Bank (SARB), but they’re also not convinced this will continue. 

Following the latest meeting of the Monetary Policy Committee (MPC), the SARB cut the repo rate by 25 basis points to 7.25%. The prime lending rate is now 10.75%. 

While this move brought tangible relief for homeowners and could improve affordability for prospective buyers, the overall sentiment among property experts is cautious about the prospects of further cuts and the broader economic context.

According to data from ooba Home Loans, the 25bps reduction equated to monthly savings of around R170 on a R1 million home loan, R339 on a R2 million bond, and roughly R282 for the average South African home, now priced at R1.66 million.

Samuel Seeff, chairman of the Seeff Property Group, welcomed the relief but noted that interest rates are still above pre-Covid levels. 

“This continues to erode the benefits of previous adjustments and stands as a barrier to the economic growth we desperately need,” he said. 

Seeff stressed that the high rate has already done serious damage, with consumers under strain and property sales volumes still trailing pre-pandemic levels, about 10% lower in the first quarter of 2025 than in 2023.

Seeff believes additional rate cuts would help leverage the property sector’s economic multiplier effect and boost the broader economy. 

Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, described the decision as a step in the right direction. 

However, she warned that South Africa’s troubled international relations, particularly with major Western trading partners, constrained the MPC from doing more. 

“Despite more recent gains, the rand still hit multi-year lows this year, and tariffs on exports to the US have not been fully reversed,” she said. 

“There’s no escaping the fact that these issues are impacting investor confidence and weakening our economy.” 

Geffen urged buyers not to stretch themselves to the financial limit. She added that they should assume the current interest rate will hold, but leave room in their budget for potential increases. Betting on further cuts would be unwise,” she said. 

Another roadblock for interest rate cuts

Interest rates have fallen by 100 basis points since peaking at 11.75% in mid-2023, with the SARB opting for four gradual 25-basis-point cuts. 

Despite that, the outlook for further reductions is complicated by both domestic and global headwinds.

Mamello Matikinca-Ngwenya, Chief Economist at FNB, said uncertainty around capital flows and South Africa’s deteriorating fiscal outlook are key reasons the SARB remains cautious. 

While another 25bps cut this year is still possible, particularly if the US Federal Reserve resumes its own rate-cutting cycle, there are significant risks that could derail that scenario.

One of the most significant longer-term shifts on the horizon is the SARB’s plan to lower its inflation target. 

Andrew Golding, CEO of the Pam Golding Property Group, said this could delay future rate cuts in the short term, as the Reserve Bank focuses on anchoring inflation expectations at a lower level. 

“Most agree this will help reduce inflation over time, creating room for cuts in the future, but the transition will be painful.”

Chris Tyson, CEO of Tyson Properties, echoed this view, advising South Africans to accept the current interest rate environment as the “new normal.” 

He believes people should plan their budgets around current levels and consider any small reductions a bonus rather than a given.

Economists like FNB’s Koketso Mano reinforced this more restrained outlook, noting that inflation is expected to rise again as favourable base effects wear off. 

“This narrows the SARB’s window to cut rates as inflation heads back toward the midpoint of the target range.” 

Mano also pointed out that a weak and volatile rand and elevated global risks will continue to exert upward pressure on imported inflation.

Izak Odendaal, Chief Investment Strategist at Old Mutual, added further context, highlighting the SARB’s ongoing efforts to transition to a lower inflation target, potentially as low as 3%. 

While this would support lower inflation and eventually lower interest rates, he warned of short-term sacrifices. 

“With a lower target, rates need to stay higher for longer to bring inflation down. That means slower economic growth in the short term, even if growth improves over the long run.”