Warning for homebuyers in South Africa

South Africa’s property sector has reacted with disappointment at the Reserve Bank’s Monetary Policy Committee’s (MPC) decision to keep interest rates on hold.

While the decision wasn’t exactly unexpected, various experts in the sector said it was a missed opportunity for the central bank to boost consumer confidence and stimulate the economy when the going is good.

As a result, many expect property demand to be dulled for new buyers, while the market might shift more positively towards renting.

In addition, the views come with a warning that if the South African government doesn’t get its foreign policies in order, more pain could be lying ahead.

Announcing the decision on Thursday (20 March), Reserve Bank governor Lesetja Kganyago paid particular focus on the risks that may lie ahead for South Africa.

This aligns with the Reserve Bank’s typically hawkish approach to setting monetary policy, where it tends to err on the side of caution in the face of uncertainty.

Given the global uncertainties ahead, with global markets trying to navigate rapid shifts in policy from the United States and forecast the impact these will have on major economies, the MPC voted 4-2 in favour of a hold.

Samuel Seeff, chairman of the Seeff Property Group, said this wastes the good economic metrics happening right now—such as lower-than-expected inflation and relative stability in the rand.

Seeff said the fact that rates are still 100 bps above pre-COVID levels and that the gap between interest rates and inflation is one of the biggest globally should have given the SARB more room to cut rates by 25 or even 50 basis points.

“Keeping the rate so high for so long continues to do more damage than good to the economy, especially when it needs vital stimulus to boost growth and job creation, the lack of which poses a far greater risk than inflation,” he said.

According to Andrew Golding, chief executive of the Pam Golding Property group, the near-term inflation outlook is positive, which could have been convincing for a cut.

Even though Households will have to contend with an Eskom tariff increase, VAT and tax hikes in the coming months, April is set for a sizeable 80-90 cents per litre petrol price cut, which should temper some of this.

This could have given the central bank some room to cut rates and bring it in line with the neutral level of 7.25%.

As it stands though, the hold on rates will put pressure on new buyers and dampen the market, he said.

For existing homeowners and residential property investors, however, Golding said there is comfort in the fact that national house price inflation has risen steadily.

Prices have shown growth from a low of 2.2% in late-2023 to 6.22% in February 2025, which is the strongest growth rate in national house prices since late-2007.

“This rebound has also outpaced the turnaround in the consumer inflation rate from a low of 2.8% in October 2024 to 3.2% in February 2025, resulting in real inflation-adjusted growth in house prices for six consecutive months,” he said.

Foreign policy mess means trouble

Some property experts expressed frustration that the rate decision was heavily based on uncertainty around the United States.

These include the US-driven uncertainties related to the tariff and trade war and the direct uncertainties tied to South Africa’s deteriorating relationship with the world’s biggest economy.

Kganyago specifically mentioned that one of the scenarios the bank looked at was South Africa losing access to US markets, particularly beneficial access through AGOA.

Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty said that his showed the importance of South Africa getting its foreign policies right—because South Africans are suffering for it.

She said the MPC referring to “the global economy is not on a stable footing” was a politically correct way of saying that South Africa is “losing the game of chicken we’re playing with America and its allies”.

Geffen said that if the country doesn’t immediately revise its foreign policies, the outlook will get much worse, and South Africa’s citizens will be the ultimate losers.

“As a business, we call on the government to start working for the good of the country, not the good of certain people within the majority party,” she said.

“It’s no longer about balancing economic outlooks; it’s now a matter of survival for South Africa as a nation.”

More positively, other groups anticipate rate cuts to come once the Reserve Bank is satisfied there is more stability in the global market.

While some projections see this as soon as May, most economists are anticipating a rate cut later in the year.

In the meantime, Berry Everitt, CEO of Chas Everitt International, said the current rate will likely dull consumer and investor confidence and put a damper on home sales overall—but it will also most likely increase the demand for rental properties.