Rate cut delivers immediate boost for SA homeowners

The South African Reserve Bank's Monetary Policy Committee (MPC) has delivered a welcome 25-basis point reduction in the repo rate, bringing it down to 6.75% and the prime lending rate to 10.25%. This move, following the positive tone of the Medium-Term Budget Policy Statement (MTBPS), injects a fresh wave of confidence into the residential property market and is expected to drive increased sales activity heading into 2026.

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The positive economic tailwind

While the effect of interest rate cuts typically takes two to three months to be reflected in market movement, the outlook is strongly supportive of growth.

• Dr Andrew Golding, chief executive of the Pam Golding Property group, points out that the prospect of a further rate drop in early 2026, alongside the potential avoidance of the previously discussed R20 billion tax hike, creates an environment conducive to an increase in residential sales from the second quarter of next year.
• Samuel Seeff, chairman of the Seeff Property Group, highlights that this cut, the fourth since the easing cycle began in September 2024, brings "early festive cheer" and vital relief to the economy by lowering the cost of debt and boosting disposable income, particularly before the retail season.
• Herschel Jawitz, CEO of Jawitz Properties, affirms this positive market reaction, stating: “The interest rate cut of 25 bps will be well received by consumers, homeowners and buyers alike. The residential market has continued to show a gradual firming of property prices, driven by lower interest rates which improve affordability and a tightening of stock relative to demand across most parts of the country.”

This positive sentiment is underpinned by key developments:

• New inflation target: Treasury has formally adopted a lower 3% inflation target, reinforcing a commitment to long-term price stability. This new anchor, more closely aligned with global peers, is expected to create room for structurally lower interest rates over the medium to long term, ultimately improving housing affordability.
• Contained inflation: Despite a slight uptick in consumer inflation to 3.6% in October 2025 (from 3.4% in September), headline inflation remains well within the Bank's new 2–4% target range, confirming that price pressures are contained.
• Broader optimism: Further good news for the economy, cited by Seeff and High Street Auction Co director, Greg Dart, includes South Africa's recent exit from the Grey List, an S&P credit rating upgrade to BB, and a moderately positive GDP growth outlook, with real GDP expected to average 1.8% between 2026 and 2028.

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First-time buyers lead the charge

Improved affordability is already translating into increased market participation, particularly among the younger demographic.

• Data from ooba Home Loans shows first-time buyers accounted for 47.9% of all national applications in October 2025.
• This trend is particularly pronounced in key metros:
• • Johannesburg saw first-time buyers make up 51.7% of applications.
  • The Free State recorded an impressive 60.3%.

In addition, general housing activity has strengthened across residential markets in Johannesburg, Pretoria, and KwaZulu-Natal, while the Western Cape and the Garden Route maintain consistently robust performance.

House price growth gathers momentum

The recovery in house price growth is continuing across major regional markets, according to the Pam Golding Residential Property Index.

National house price inflation rose to +3.8% in October 2025, averaging +3.3% for the year to date.

Savings and strategy for homeowners

For existing and prospective homeowners, the cumulative effect of the rate cuts since September 2024 provides significant financial relief:

• Monthly savings: The 25bps cut provides immediate savings. On a R1 million bond (over 20 years at prime), the monthly repayment reduces by R168. The total cumulative drop since the cutting cycle began means the repayment on a R1 million mortgage has decreased by over R1,000 compared to mid-2024.
• Lending competition: Aggressive competition between banks is also pushing the average mortgage rate below prime, with some averages around 9.5%, further benefiting demand and long-term price growth.

While the outlook is positive, Tyson Properties CEO, Chris Tyson, advises prospective buyers to maintain a strategy of sustainable investment. He suggests using year-end bonuses to build a healthy deposit to secure favourable bond rates and reviewing unnecessary expenses, as inflation could remain slightly elevated in the short term due to beginning-of-year service charge increases.

Ultimately, with lower rates improving affordability and the economic outlook firming, market conditions are increasingly favourable for both new entrants and existing homeowners heading into 2026.

https://www.property24.com/articles/rate-cut-delivers-immediate-boost-for-sa-homeowners/32879