In response to yesterday's announcements of a 0.25% basis point cut to the prime lending rate and Eskom’s tariff increase for the year of 12.7%, Lew Geffen Sotheby’s International Realty CEO Yael Geffen says the government is “giving with one hand and taking with the other”.
READ: Property experts react to another SARB 0.25% interest rate cut
“The net effect is negative for consumers because the significant increase in electricity costs outweigh the minimal benefit of the interest rate decrease.
“Make no mistake; business as a whole, particularly the property industry, is grateful for any cut to the repo rate, but today’s cut is too small to mitigate the electricity increase – which isn’t a luxury spend for households.”
Geffen says examining the interest rate cut shows that:
Impact on Borrowing Costs: Even though this is the MPC’s third consecutive 0.25-point cut and will reduce the cost of borrowing in terms of bond repayments, personal loans and credit cards, it’s still small and unlikely to have a noticeable impact on most consumers.
Impact on Savings: Lower interest rates mean reduced returns on savings accounts and other interest-bearing assets. Again, a 0.25 basis point change is negligible.
Overall Effect: The interest rate decrease is so minimal that it is unlikely to significantly affect consumer behavior or financial well-being.
But with regards Eskom’s tariff increase from April:
Impact on Household Budgets: A 12.7% increase in electricity costs is substantial and will directly raise utility bills for households. This could strain budgets, especially for low- and middle-income families who spend a larger proportion of their income on essential utilities.
Impact on Businesses: Higher electricity costs may lead to increased operating expenses for businesses, which will be passed on to consumers in the form of higher prices for goods and services.
READ: Is now the time to buy? Rate cuts boost housing demand
Experts from the Rawson Property Group, David Jacobs and Leonard Kondowe, share insights on how this development will impact the market in the short to medium term.
Immediate impact on buyers and investors
Lower interest rates directly translate to reduced bond repayments, which makes buying a home more accessible for many South Africans. Leonard Kondowe, National Manager for Rawson Finance, highlights how this environment benefits both new buyers and existing homeowners.
“Lower repayments reduce the income threshold needed to qualify for a home loan, which is a significant boost for first-time buyers,” Kondowe explains. “It also makes homeownership a more attractive option for renters who’ve been hesitant to take the leap. For existing homeowners, this is a perfect time to consider paying down debt faster or refinancing to take advantage of the lower rates.”
He advises prospective buyers to capitalise on this favourable climate. “While rates are trending down, saving for a deposit and securing prequalification remain key steps. A deposit not only improves your chances of bond approval but can also secure you a better interest rate, resulting in significant long-term savings.”
Market expectations for 2025
What’s next for the property market? Jacobs remains optimistic about 2025.
“It’s early in the year, but the signs are positive. While we can’t expect the explosive growth seen in 2022 and 2023, the current stability is healthy for the market. Buyers have more negotiating power, and banks are showing increased willingness to lend, especially to those without large deposits.”
He also believes that the interest rate environment could lead to renewed interest in long-term property investments.
“This trend makes it an ideal time for investors to re-enter the market. As affordability improves, demand will naturally increase, which could lead to stronger growth in the medium term.”
Strategic advice for buyers and sellers
Jacobs recommends that buyers act now to take advantage of the favourable conditions.
“Start by working with a trusted real estate agent who knows your area well. Pricing is competitive, and properties offering good value will be snapped up quickly.” For sellers, realistic pricing remains key.
“The market is stable, but buyers are savvy,” Jacobs says. “Setting a fair asking price is critical to attracting interest and securing a sale in this environment.”
Looking ahead
The SARB’s consistent rate cuts are creating a more accessible and sustainable property market. For buyers, this is the perfect time to step onto the property ladder or upgrade to their dream home. For existing homeowners, it’s an opportunity to reduce debt and strengthen financial stability.
Rate cut welcomed, but it should have been 50bps, says Seeff
Samuel Seeff, chairman of the Seeff Property Group says the rate cuts last year provided some impetus for the property market with sales volumes increasing towards the latter part of the year. While this rate cut provides a further boost, he says more interest rate relief is needed to get the market back to the volumes of two years’ ago, and the resulting economic and tax boost that this can provide.
Nonetheless, it is a good time for buyers to get into the market and find good value, especially in Gauteng and inland provinces where stock levels are still high. If the economy remains stable, and we start seeing some growth, then on the whole, Seeff believes the property market should perform considerably better compared to last year.
Areas operating from a low base such as Gauteng could see good growth with increased sales volumes. Once stock levels start coming down, prices can then finally start rising more meaningfully.
Seeff believes the Western Cape, and most coastal areas which performed better last year compared to the inland areas will likely continue its good performance. Many areas in the Cape especially are already seeing low stock levels, and prices could again rise at inflation-topping levels.
As a result of the 25bps rate cut, mortgage repayments will reduce by:
- R750 000 bond – from R7 869 to R7,741– thus saving R128
- R900 000 bond – from R9 443 to R9,290 – thus saving R153
- R1 000 000 bond – from R10 493 to R10,322 – thus saving R171
- R1 500 000 bond – from R15 739 to R15,483 – thus saving R256
- R2 000 000 bond – from R20 985 to R20,644 – thus saving R341
- R2 500 000 bond – from R26 231 to R25,805 – thus saving R426
- R3 000 000 bond – from R31,478 to R30,966 – thus saving R512
- R5 000 000 bond – from R52,463 to R51,609 – thus saving R854
- (Based on a 20-year repayment period at the prime rate)
READ: SARB reduces repo rate by 25bps, prime lending rate now 11%
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett: “If inflation increases as a result of his global trade policies, we might see the South African Reserve Bank tighten their stance around interest rates to keep inflation under control. Investors might also adopt a “wait and see” approach until Trump’s policy decision become clearer. If this is the case, it could have a negative impact on the local property market,” Goslett cautions.
But, for now, Goslett remains optimistic about how the property market will perform in the year ahead. “Despite the challenges that the year presented, we closed 2024 with a record-breaking R4.1 billion in registered sales during December, complemented by an additional R3 billion in reported sales. If 2024 ended on such a high note, 2025 holds immense potential for growth and success within our network, and possibly for the greater market overall,” Goslett concludes.
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