South Africa’s residential property market could be on the verge of a significant turnaround following the South African Reserve Bank’s (SARB) latest decision to cut the repo rate by 25 basis points, bringing the prime lending rate down to 11%.
This marks the third rate cut since September 2024 and is the first time the prime lending rate has reached this level since May 2023.
Toni Anderson, Head of Home Services at Standard Bank, explains that the series of rate cuts, particularly the two introduced in late 2024, seem to have already had a positive impact on the residential property market.
“We’ve seen a notable increase in home loan applications between Q3 and Q4 2024, reflecting improving buyer sentiment,” says Anderson.
This shift in sentiment, combined with a more optimistic economic outlook, has led to greater price competitiveness from sellers, with more buyers taking action in select regions.
For example, Johannesburg’s housing market, which saw price declines throughout 2023, is showing signs of stabilisation.
The latest rate cut, along with easing consumer inflation and expectations of an additional 25 basis point reduction in March 2025, could provide the catalyst for real-term house price growth in 2025.
With improved affordability, the new borrowing conditions present a favourable environment for buyers and sellers alike, offering them an opportunity to lock in benefits before rates potentially stabilise in the near future.
As the market adjusts to these changes, many industry experts are optimistic that this rate cut could signal a turning point for South Africa’s residential property market in the coming year.
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