What the rate drop means for buyers, sellers, and homeowners?

The South African Reserve Bank announced on 31 July a 25 basis point drop in the repo rate, bringing it down to 7%. This change lowers the prime lending rate to 10.50%, a welcome move for homeowners, buyers, and investors navigating a challenging economic landscape.

"A lower interest rate environment gives consumers a bit of breathing room," says Craig Mott, National Sales Manager for the Rawson Property Group. "It may not be a major cut, but in today's market, even a small reduction helps - and it boosts confidence."

Inflation in Check, but Headwinds Remain
June inflation came in at 3.0%, slightly up from May's 2.8%, but still well within the SARB's 3-6% target range. It's a strong signal of economic stability, especially after earlier fears of rising inflation began to ease.

"Inflation is behaving, which opens the door for easing," says Mott. "But with costs like food and utilities still climbing, the SARB is rightly staying cautious in its approach."
Households continue to face rising costs in daily essentials, reinforcing the need for smart financial decisions.

Global Pressures and Power Challenges Still Linger
Domestically, the energy sector remains a risk. While load-shedding has been minimal this winter, ongoing infrastructure weaknesses and unplanned outages mean energy security remains fragile.

Globally, trade tensions-particularly between South Africa and the United States-continue to cloud the economic outlook. With potential shifts in trade agreements and tariffs, growth projections for 2025 remain subdued at 1.2%, according to a recent Reuters poll.

"These factors justify the SARB's careful step forward," Mott notes. "For the property market, it means staying focused on long-term value and being strategic in every decision."

First-Time Buyers: A Better Window of Opportunity
With the rate cut in effect, affordability slightly improves - giving first-time buyers a stronger incentive to act. "With inflation in check and bond repayments easing slightly, it's a great time to enter the market," says Mott.

"The most important thing is to be prepared. Strong financial profiles and prequalification still open the door to excellent home loan options."

Rawson Finance continues to offer a free prequalification service to help buyers assess their affordability and improve their chances of approval.

Sellers: Price Smart to Attract Real Buyers
The rate cut may not flood the market with new buyers overnight, but it does create more favourable conditions for serious home seekers - especially in the R1.5 million to R2.5 million bracket, where demand remains solid.

"Buyers are cautious, but they're there," Mott says. "What matters now is realistic pricing, professional marketing, and working with an agent who knows how to reach the right audience." Overpriced homes are still likely to sit, while competitively priced properties in high-demand areas move quickly.

Homeowners: Time to Reassess and Optimise
A slight rate drop offers current homeowners a valuable opportunity to revisit their financial goals.
"Now's a great time to take stock," advises Mott. "You could use the savings to pay down your bond faster, or consider refinancing if your circumstances have improved." 

Home improvements remain a smart option - especially upgrades that enhance property value - but expert advice is essential to avoid overcapitalising.

Looking Ahead: Strategy is Still Key
While the property market isn't booming, it is quietly strengthening. Buyers are more informed, sellers are adjusting, and homeowners are reassessing. It's a space built on substance, not speculation. 

"We're seeing a more mature, resilient property market," says Mott. "It's thoughtful, not reactive - and that's a good thing. For those who plan well and move smartly, the opportunities are there."

Key Takeaways:

• Buyers: Prequalify, build your deposit, and be ready to act.
• Sellers: Price realistically and understand today's buyer mindset.
• Homeowners: Use the rate drop to refinance, reduce debt, or invest wisely in your property.

Support for Repo Rate Decrease to 7.%

Ryan Greeff, CEO of Quay 1 International Realty, comments that he's pleased to see the South African Reserve Bank take a proactive step in decreasing the repo rate to 7.00%. This 25 basis point reduction is a positive move for the property market, particularly in Cape Town, where affordability and buyer confidence are highly sensitive to interest rate adjustments. Lower interest rates have historically brought about a surge in market activity, especially from first-time buyers who often struggle with high borrowing costs. With the spring selling season approaching, we anticipate this rate cut will provide the perfect window for many aspiring homeowners to enter the Cape Town market.

Quay 1 has experienced strong momentum this year, having achieved over R1.4 billion in closed deals during the first half of 2025. This performance reflects growing buyer confidence and heightened market activity, demonstrating the resilience and opportunity present in Cape Town's property market.

This adjustment will lower monthly bond repayments, freeing up disposable income and making homeownership more accessible, particularly vital as living costs remain high. We have observed that whenever borrowing becomes less expensive, demand in the Cape Town market increases, driving positive price growth across the board. The additional affordability could benefit not just buyers but also sellers, as more competition often leads to quicker sales and competitive offers.

Moreover, the steady stream of rate reductions since 2024 has already started to restore buyer confidence, with both investors and end-users showing renewed interest in real estate transactions. While we recognise these cuts won't create an overnight boom, there is a crucial "psychological shift"; buyers are beginning to plan for the future again, and property is returning as a central conversation in financial planning. All of this coincides with a tightening of market stock, particularly in entry-level segments, setting the stage for a vibrant and potentially fast paced spring season.

As the market landscape evolves, Quay 1 encourages buyers, especially first-timers, not to delay, since future rate decreases are not guaranteed, and home prices may rise in a more active market. We are optimistic that this rate cut will boost both market activity and affordability across Cape Town.

The MPC decision to cut the repo rate by 25 basis points as households face one of the toughest economic periods in living memory.

Yael Geffen, CEO of Lew Geffen Sotheby's International Realty, welcomed decision to cut the repo rate by 25 basis points.

"It's certainly great that the financial pressure on households will ease slightly in the short term. On a R2 million bond, monthly repayments will go down by just below R340 a month, but we're on the precipice of an economic disaster and while this rate cut will help for now, it might come back to bite us in the long-term.

"The US Federal Reserve chose not to cut rates this week when America's economy ramped up to 3% growth in the second quarter, while we're easing back when ours is circling the drain.

"We have record unemployment, basic household costs such as electricity have risen by several hundred percent in recent years and on average households are spending an alarming two thirds of their income servicing debt."

This decrease sees the prime lending rate drop to its lowest point since 2022.

Geffen says the volatility on the trade front is one of the major reasons South Africans have been returning to the safety of property investment because it's tangible.

"Real estate will always be a safe haven investment. It is a long-term appreciation asset, people understand that it is the foundation of personal wealth creation and the uptick in the market this year is testament to that."

Geffen's advice to sellers in the current market is to be realistic about pricing, and to buyers not to extend themselves to the limit.

Good new: interest rates drop further

The Monetary Policy Committee announced today that interest rates will drop by 0.25%, bringing the repo rate to 7% and the prime lending rate to 10.5%.

REMAX Southern Africa views today's announcement by the MPC as a welcome step towards reinvigorating economic activity and restoring consumer confidence.

"This cut is likely to serve as a much-needed catalyst for transaction volumes, particularly in the affordable and mid-market sectors. The market is still price-sensitive, but this rate cut could re-energize interest in property acquisitions," says Regional Director and CEO of REMAX Southern Africa, Adrian Goslett.

"While this 0.25% cut may seem modest, it does mark a positive step toward restoring the rate environment we saw before the pandemic. Back in January 2020, the repo rate stood at around 6.5%, and although we're still well above that, today's decision brings us incrementally closer. It's an encouraging signal that the Reserve Bank may be pivoting towards a more growth-friendly stance, which could help unlock pent-up demand in the housing market," says Goslett.

Despite broader economic challenges, the housing market has retained a degree of buoyancy. House prices have strengthened and sales volumes continue to surpass expectations, especially within the REMAX SA network. REMAX Southern Africa reports that its registered sales figures have increased by 12.5% compared to last year (as at end June), and their total units sold increased by 6.5%. 

"I remain optimistic about how this latest interest rate cut will impact the local housing market and expect to see activity strengthen further in the months to follow," he says.   

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