The impact of Trump’s presidency on South Africa’s property market

As the world assesses the political and economic impact of Donald Trump’s presidency, questions arise about how his policies might ripple through markets well beyond the United States.

In South Africa, one sector likely to be affected is the property market, which could experience both direct and indirect effects from the global shifts and policies instigated by the new US administration.

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, stressed that global political changes always influence local markets.

“While the South African property market is mainly shaped by domestic factors such as interest rates, inflation, and local investor confidence, the broader international environment—especially US policies—cannot be overlooked,” he said.

A key factor to watch is the strength of the rand against the US dollar. Under Trump’s presidency, his “America First” economic policies often led to market fluctuations and volatility in emerging market currencies, including the rand.

A weaker rand raises the cost of imports and could contribute to inflation, which in turn might put pressure on the South African Reserve Bank to increase interest rates.

Higher rates typically make it more expensive for homebuyers and could reduce demand in the property market.

However, there are potential benefits as well, Goslett said, noting out that global uncertainty often drives high-net-worth individuals to invest in property in stable markets.

“South Africa’s real estate market offers attractive opportunities for foreign investors looking for value. This could help offset some of the negative effects of broader global economic challenges,” he said.

Ultimately, the South African property market is influenced by a variety of factors, and while Trump’s policies might not immediately or dramatically affect it, they could have an indirect influence on the market’s performance over time.

The US president on Sunday announced that the United States would halt all aid to South Africa in response to the country’s land expropriation policies, triggering a sharp selloff of the rand.

“The United States won’t stand for it, we will act,” Trump wrote in a post on Truth Social on Sunday evening. “Also, I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”,

In the wake of the announcement, the rand moved above R19 to the dollar, before recovering slightly to R18.95 in Monday trade.

In response, the South African government said it is “looking forward to engaging” with United States of America (US) president Donald Trump’s administration on bilateral relations and other issues.

Trump said on Truth Social: “South Africa is confiscating land and treating certain classes of people VERY BADLY (sic). It is a bad situation that the Radical Left Media doesn’t want to so much as mentioned. 

“A massive Human Rights VIOLATION (sic), at a minimum, is happening for all to see. The United States won’t stand for it, we will act. Also, I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”

However, the new Act states that property may not be expropriated arbitrarily or for a purpose other than a public purpose or in the public interest, president Ramaphosa’s department said.

The Expropriation Act, which underwent a five-year public consultation process, was deliberated in Parliament, and is in line with the South African Constitution.

The Act repeals the Expropriation Act of 1975 and allows for the state to expropriate land in the public interest – subject to just and equitable compensation, the government said.

On Monday morning, the Presidency committed to engaging the US on the new Act.

“The recently adopted Expropriation Act is not a confiscation instrument, but a constitutionally mandated legal process that ensures public access to land in an equitable and just manner as guided by the constitution. 

“South Africa, like the United States of America and other countries, has always had expropriation laws that balance the need for public usage of land and the protection of rights of property owners.

“We look forward to engaging with the Trump administration over our land reform policy and issues of bilateral interest. We are certain that out of those engagements, we will share a better and common understanding over these matters,” the Presidency said.

Government has not confiscated any land

The Presidency has also refuted any allegations that land has been confiscated by the state.

“South Africa is a constitutional democracy that is deeply rooted in the rule of law, justice and equality. The South African government has not confiscated any land.

“The US remains a key strategic political and trade partner for South Africa. With the exception of PEPFAR [U.S. President’s Emergency Plan for AIDS Relief] Aid, which constitutes 17% of South Africa’s HIV/AIDS programme, there is no other significant funding that is provided by the United States in South Africa,” the Presidency said.

Trump cuts off funding to South Africa over land expropriation concerns

US President Donald Trump has announced that he will be cut off all future funding to South Africa, accusing the country of “confiscating” land and “treating certain classes of people very badly.”

The decision comes amid controversy over the South African government’s land expropriation policy, which Trump has demanded be fully investigated.

The issue of land redistribution has been contentious in South Africa, with efforts to address historical inequality under apartheid drawing strong criticism from conservative figures, including South African-born billionaire Elon Musk, a close adviser to Trump.

The new law, signed by South African President Cyril Ramaphosa last month, allows for the government to expropriate land with “nil compensation” in cases deemed to be in the public interest.

On Sunday, Trump voiced his concerns on Truth Social, stating: “South Africa is confiscating land, and treating certain classes of people VERY BADLY. I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”

The South African government has defended the bill, arguing that it does not allow arbitrary expropriation but mandates efforts to negotiate with property owners before any expropriation takes place.

Later, Trump elaborated on his concerns during a briefing with journalists, stating: “South Africa’s leadership is doing some terrible things, horrible things,” without providing specific examples.

He added, “That’s under investigation right now. We’ll make a determination, and until such time as we find out what South Africa is doing – they’re taking away land and confiscating land, and actually they’re doing things that are perhaps far worse than that.”

Ramaphosa signed into law the Expropriation Bill which repeals the pre-democratic Expropriation Act of 1975 and sets out how organs of State may expropriate land in the public interest for varied reasons.

Section 25 of the Constitution recognises expropriation as an essential mechanism for the state to acquire someone’s property for a public purpose or in the public interest, subject to just and equitable compensation being paid.

The bill assented to by president Ramaphosa outlines how expropriation can be done and on what basis. This law will assist all organs of State – local, provincial and national authorities – to expropriate land in the public interest for varied reasons, the government said.

The bill repeals the Expropriation Act and provide a common framework in line with the Constitution to guide the processes and procedures for expropriation of property by organs of state.

In terms of this law, an expropriating authority may not expropriate property arbitrarily or for a purpose other than a public purpose or in the public interest.

Expropriation may not be exercised unless the expropriating authority has without success attempted to reach an agreement with the owner or holder of a right in property for the acquisition thereof on reasonable terms.

An expropriating authority is obliged to enter into negotiations with the owner of a property required for such purposes, the government said.

“An expropriating authority must also attempt to reach an agreement on the acquisition of the property before resorting to expropriation – except in circumstances where the right to use property temporarily is taken on an urgent basis in terms of a provision in the legislation.”

The law provides for disputes to be referred for mediation or to appropriate courts.

Local government dysfunction stalls growth in South Africa’s key cities, report finds

A study by one of the world’s leading academic publishers highlights the pressing need for local government reform in South Africa, focusing on the detrimental effects of poor governance, financial mismanagement, and failing infrastructure in the country’s metropolitan areas on economic growth.

Taylor & Francis, known for its publications in social sciences, science, technology, engineering, and medicine, featured a research note by Ivan Turok and Justin Visagie.

They pointed out that while cities should be the engines of employment and economic activity, many are instead hindering national growth.

The researchers identified a “striking concentration” of employment in urban areas, noting the quantity and nature of these jobs.

“The metros have a more favourable and diverse economic structure than towns and rural areas. However, most have performed poorly over the past decade, thereby dragging down the national economy.”

Business Leadership South Africa (BLSA) CEO Busi Mavuso recently stated that despite being South Africa’s economic powerhouse, Gauteng’s decline in job numbers, the slow disintegration of its largest metros, and persistent political dysfunction are undermining the country’s overall progress.

Mavuso said that the province has acted as a major hindrance to the nation’s economic growth, pointing out the significant deterioration in Gauteng’s major metropolitan areas, with political instability and dysfunction stalling economic performance.

Given that the province accounts for a third of South Africa’s GDP, this has a ripple effect on the national economy.

“Political dysfunction has a real cost in economic performance,” Mavuso said. “So, while the GNU is delivering improved confidence nationally, the experience of much of Gauteng remains negative.”

Turok and Visagie called for further research into spatial inequalities and labour market dynamics, emphasizing that the deteriorating governance in metros requires urgent attention from national authorities due to their critical role in the economy.

“Most of the metros have performed poorly over the last decade. It is difficult to imagine the national economy prospering as long as the main cities struggle and stagnate,” they stated.

The findings underscore the dysfunction and mismanagement plaguing South Africa’s metropolitan areas, which house key industries such as food and beverage production, chemicals, and pharmaceuticals.

These areas are grappling with crises in energy, water, transport, and logistics, along with widespread financial mismanagement.

This study is released as South Africa prepares to place greater focus on the performance of its metros and municipalities through the government’s Operation Vulindlela 2.0 initiative.

The programme, launched by president Cyril Ramaphosa’s office and the Treasury in 2020, aims to expedite reforms.

The research also highlights the alarming level of debt municipalities have accumulated with Eskom, now totalling R109.4 billion—an 18-fold increase from the R5 billion owed in 2015—jeopardising efforts to stabilize the national power utility.

Turok and Visagie argue that it is unfair to expect metros to adequately support incoming populations without substantial state backing for public infrastructure and essential services.

Their study found that the five largest metros—Johannesburg, Cape Town, Tshwane, eThekwini, and Ekurhuleni—account for nearly 60% of the nation’s formal employment.

However, the researchers cautioned, “One could argue that this map does not adequately capture the economic significance of the metros because they cover such a small proportion of the country’s territory.”

They also warned that overemphasis on this map could result in metros receiving insufficient attention from decision-makers. “Repeated use of this kind of map over many years could perhaps contribute to the metros receiving less attention than they deserve—or require to realise their potential.”

The study further revealed that none of the metros saw significant employment growth in manufacturing or other tradable goods. In fact, the Gauteng metros experienced job losses in manufacturing.

In Cape Town, the majority of employment growth came from retail and wholesale services, followed by administrative sectors such as call centres, labour brokers, and security services, as well as finance and insurance.

Top 10 most expensive suburbs in South Africa with the highest number of sales

Data from property analytics group Lightstone reveals that the Western Cape is home to South Africa’s most expensive suburbs, with Llandudno, Bishopscourt, and Clifton leading the pack.

These high-end areas boast average property prices exceeding R20 million. However, despite their luxury status, these suburbs had fewer than 30 sales each last year, making them ultra-exclusive.

In contrast, Sea Point in Cape Town, Bryanston in Sandton, and Sandown in Milnerton saw the highest sales volumes. Sea Point led with 730 sales at an average price of R4,023,945, followed by Bryanston with 696 sales at R3,753,662 and Sandown with 584 sales at R2,041,470.

The dominance of the Western Cape in the luxury property market is driven by a combination of geographical advantages and social trends.

The region’s consistent draw for both local and international buyers—due to its scenic beauty, world-class amenities, and overall lifestyle appeal—keeps demand for premium properties high.

Property experts note that Cape Town has long been a magnet for wealthy individuals, whether they are looking for a second home, a retirement haven, or a place to invest. The supply of properties in exclusive areas is limited, but demand continues to surge, ensuring that these areas remain among the most expensive in the country.

While the Western Cape is currently the epicentre of South Africa’s luxury real estate market, other areas such as parts of Johannesburg (including Sandton) and Durban’s Umhlanga are also seeing steady growth in their upscale property markets.

Lightstone predicts that while the high-end market may cool slightly due to global economic conditions, there will still be robust demand in these iconic neighbourhoods.

Experts expect continued interest from both local buyers, who are attracted to secure and prestigious locations, and international investors, who view South Africa’s top suburbs as safe havens for capital preservation.

This villa in Camps Bay is being rented out for R105,000 per month

Lew Geffen Sotheby’s International Realty says it has closed on 12-month rental deal for a contemporary four-bedroom villa in one of Cape Town’s most sought-after areas, Camps Bay.

Priced at R105,000 per month, this luxurious property is perfect for those looking for an extraordinary living experience with stunning panoramic views of the ocean and mountains, the group said.

The modern villa spans three levels, showcasing the epitome of style and comfort. The downstairs area features three spacious bedrooms, all with en-suite bathrooms. There’s also a separate laundry room and a cozy TV room/lounge with direct access to a private outdoor space.

The master bedroom, also en-suite, includes a walk-in closet and a generous balcony that offers ocean views.

On the upper level, residents will find an expansive living area that flows seamlessly from the open-plan kitchen, scullery, dining, and lounge areas. The lounge area includes a fireplace and opens onto a large terrace that features outdoor furniture and a sparkling pool, ideal for both relaxation and entertaining.

The modern kitchen is equipped with high-end appliances, including an integrated double fridge and freezer.

An additional bedroom, which can be converted into a study or office, offers access to a separate bathroom for guests’ convenience. The villa also boasts air conditioning in every bedroom and living area, a high-end security system, custom shutters, and a lift for added convenience.

For added convenience, the property includes a double garage with direct access to the villa, as well as two additional parking bays.

South Africans face shocking reality of delayed retirement age

Many South Africans still associate retirement with the age of 65, but the reality is far different. According to internal member data from Sanlam Corporate, the true retirement age for most citizens—the age at which they can afford to retire comfortably—is closer to 80.

Kanyisa Mkhize, CEO of Sanlam Corporate, is calling for collaboration between corporates, financial institutions, and other stakeholders in the retirement funding industry to create a more sustainable environment where more South Africans can retire with financial security.

“Our internal member data indicates that while 65 remains the official retirement age, the majority of South Africans cannot afford to retire at this age. Most will need to work an additional 15 years to achieve financial security in retirement.

“This 15-year gap presents a significant financial challenge and requires a fundamental shift in how we approach retirement planning and employee benefits in South Africa. The disparity between expectations and reality poses challenges for individuals, businesses, and the economy, underscoring the importance of holistic benefits to secure a better future for our workforce.”

Sanlam Corporate’s insights are based on over 300,000 Sanlam Umbrella Fund members, demographic trends, actuarial data, and other economic factors impacting the country’s retirement outcomes.

According to the data, the average South African is expected to achieve only a 25% replacement ratio (the portion of their final salary they’ll receive as retirement income) at the traditional retirement age of 65. This is significantly lower than the industry benchmark of 75%, which is generally regarded as the threshold for a comfortable retirement.

According to research by Just South Africa, a retirement income and life annuity specialist, the average South African household needs over R7 million to retire comfortably, which translates to most people not having enough saved to retire comfortably, with many only reaching around 60% of this target amount; this is based on a typical household income of R300,000 per year.

Most South African retirees only replace around 30% of their pre-retirement income with their savings. To maintain a similar lifestyle after retirement, many experts recommend saving a lump sum equivalent to 15 times your final annual salary.

Sanlam Corporate’s internal analysis assumes:

Projected investment returns of 9.25% per annum based on a moderately balanced portfolio.
Estimated inflation and salary escalation rates at 5.25% per annum, aligned with the Reserve Bank’s mandate.
A 35-year savings term, recognizing that many South Africans face delayed entry into permanent employment.
An initial working age of 30.
What this new retirement age means for South Africa

For individuals: The extended working years will have profound implications on personal financial planning and career development. Workers must now consider strategies for maintaining employability into their seventies while managing their health and skills to stay competitive in the job market.

For companies: Employers face complex challenges when managing an aging workforce while balancing transformation objectives. Sanlam Corporate’s data reveals tensions between retaining experienced older workers and providing opportunities for younger employees in a country with high youth unemployment and a large youth population. With nearly 60% of South Africans under the age of 25, as per Stats SA, younger workers face increasing competition for jobs.

For the state: The data highlights significant implications for South Africa’s social policies and welfare systems. The old age pension means test, designed to assess financial hardship among senior citizens, presents a paradox. On one hand, individuals with retirement savings may be disqualified from accessing state support. On the other hand, these savings are often insufficient for a comfortable retirement, leaving many in a financial grey area. This underscores the need for a more balanced approach to retirement savings and state assistance.

Mkhize recommends several interventions to help address the retirement age gap in South Africa, including:

Life cycle contribution options: Implementing automatically escalating contribution rates that align with annual salary increases can improve retirement outcomes. As salaries increase, so should contribution rates. By automating these increases, employees can boost their savings without sacrificing their current standard of living.

Enhanced employer matching programmes: Expanding and optimizing employer matching contributions can accelerate retirement savings. When employers increase their matching thresholds or offer more generous matching ratios, employees are incentivized to save more, effectively receiving additional compensation through retirement contributions. This benefits both employers and employees and takes advantage of tax benefits available through retirement savings vehicles.

“While the 80-year retirement age is a challenging reality, it presents an opportunity for innovation in our approach to work, savings, and retirement planning. If we want to change this reality, we need a collective commitment to providing holistic financial solutions that can help reduce the retirement age and accelerate a better working South Africa.”

Boost for South African salary earners

BankservAfrica’s Take-home Pay Index (BTPI), which tracks the average nominal take-home pay of around 4 million salaried individuals in South Africa, concluded 2024 with strong results, demonstrating a continuation of the upward trend observed throughout the year.

“The average take-home pay increased by 11.9% year-on-year, reaching R17,202 in December 2024,” said Shergeran Naidoo, BankservAfrica’s head of Stakeholder Engagements. “This marks a notable increase from the R15,367 recorded in December 2023.”

The steady rise in average salaries was apparent throughout the year, despite some monthly fluctuations.

“The BTPI highlighted 2024 as the most significant salary growth year since 2020,” said Elize Kruger, independent economist. “This positive trend was supported by an improving business environment, the suspension of load shedding, moderating inflation, political shifts, and two interest rate cuts. Additionally, enhanced company profitability, reflected in an increase in gross operating surplus, further boosted salaries.”

In 2024, nominal take-home pay rose by 7.9%, marking the highest growth rate in recent years. However, it’s important to note that this increase comes after two challenging years, as 2022 and 2023 saw minimal salary growth. With inflation easing considerably in 2024, employees enjoyed better purchasing power in real terms.

“This recovery in disposable income is reflected in stronger retail sales,” adds Kruger. “Real growth for retail sales in the eleven months to November 2024 was 2.4% higher than the same period the previous year, with positive growth also seen in passenger car sales.”

In real terms, take-home pay climbed to R14,887 in December 2024, marking an 8.7% increase from the previous year. With consumer inflation averaging 4.4% in 2024—the lowest rate since 2020—the purchasing power of South Africa’s salary earners significantly improved. Real take-home pay averaged R14,292 for the year, up 3.1%, signalling the first real increase since 2020.

Looking ahead, South Africa’s GDP is expected to grow by 1.7% in 2025, slightly higher than 2024, fuelled by stronger household consumption, higher investment spending, and structural reforms.

The continued focus on enhancing South Africa’s electricity generation capacity, addressing freight rail and port bottlenecks, and upgrading water infrastructure is expected to bolster the economy. These improvements could lead to more substantial salary increases in 2025.

The rise in purchasing power witnessed in 2024 is expected to persist into 2025, providing much-needed relief to households and further supporting consumer spending.

With consumer inflation easing from 5.3% in January 2024 to 3% in December, and an expected 4.2% average for 2025, employees can look forward to several years of real salary increases, leaving more room for discretionary spending.

The South African Reserve Bank’s latest Quarterly Bulletin reported a 5.2% nominal salary increase in the first half of 2024, compared to an average of 4.5% in 2023. With anticipated real increases, salary growth could reach around 5.7% in 2025, depending on factors like employer financial health, employee performance, and talent retention goals.

“With all these positive shifts, salaries are expected to continue building on the gains made in 2024 as we move into 2025,” said Kruger.

Experts forecast stronger property market performance in 2025

The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has decided to reduce the repo rate by 25 basis points, with effect from 31 January 2025.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, said he latest adjustment provides some much-needed relief for South African consumers and is expected to have a positive impact on the local property market.

“Following previous rate cuts in September and November, this additional adjustment positions the property market for potentially more favourable conditions in the months ahead, keeping in mind that the impact of an interest rate reduction typically becomes evident a few months after the market has had time to adapt to the change,” he said.

This cut will also help mitigate some of the potential risks that face the South African economy following Trump’s recent inauguration.

His appointment introduces new uncertainties and potential shifts in global economic policies, which could indirectly affect the South African economy and real estate market, said 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 said.

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 said.

Samuel Seeff, chairman of the Seeff Property Group said a 50bps cut would have been far more meaningful adding that more interest rate relief is needed to get the market back to the volumes of two years’ ago.

“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, with more 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, he said.

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.

Dr Andrew Golding, chief executive of the Pam Golding Property group said sentiment has improved, in general, with the previous two repo rate reductions of a cumulative 50bps in 2024 already creating a ripple effect across the residential property market – increasing uptake, particularly in the lower to middle sectors of the market, while also boosting confidence and activity in the luxury market.

“Sales activity nationally is experiencing an uptick, with increased activity among first-time buyers – the most sensitive to interest rates – evident in the marketplace.”

According to ooba Home Loans, there is clear evidence of a recovery in first-time buyer demand during H2 2024, with notably strong growth in demand in Mpumalanga, Johannesburg and Gauteng South and East.

Golding noted that the banks continue to support the housing market, with the average (weighted) concession relative to prime improving across all regional markets in 2024.

The demand for investment or buy-to-let properties surged to 15.1% of applications in December 2024, according to ooba, with investment demand averaging 12.6% of applications last year – up from 10% in 2023.

“While investment demand rose in most regions during the course of last year, this remains concentrated in the Western Cape, with 38.8% of all applications in December 2024 reflecting this demand.”

From a Pam Golding Properties perspective, the increased activity in the residential property market is borne out by the fact that November and December 2024 were busy months, with our group sales well ahead of transactions concluded in Nov/Dec 2023.

For the local housing market, the recovery in house prices continues to gather momentum and become more broad-based. While the Western Cape remains the primary engine of the recovery, having consistently outperformed the national market during the past five years, the rebound in house prices has spread to most other regions as pressure on household finances eases.

According to the Pam Golding Residential Property Index, national house price inflation has risen steadily from below 2% in late 2023 to +5.1% in December 2024.

Why the latest rate cut is a significant shift for South Africa’s property market

The property industry has welcomed the latest rate cut by the SA Reserve Bank’s monetary policy committee (MPC), calling it a significant shift that will likely improve market sentiment and potentially spark an uptick in buying activity.

SARB cut interest rates by 25 basis points on Thursday with the country’s prime rate now 11.00%, from 11.75% as recently as early September last year.

For a new R2 million home loan at the prime rate, monthly repayments have now decreased by approximately R1,000.

Landsdowne Property Group pointed to a likely significant positive shift in market sentiment for the property market and especially the Johannesburg market which needs rejuvenation.

Jonathan Kohler, Founder and CEO of Landsdowne said: “The cumulative 75 basis point reduction, which amounts to three quarters of a percent is a meaningful shift. Not only does this improve market sentiment, but it also enhances affordability, potentially sparking an uptick in buying activity.

“Each interest rate cut improves perceptions of the market and increases people’s willingness to purchase property. These reductions are exactly what Johannesburg needs to see a return of market activity.

Dr Andrew Golding, chief executive of the Pam Golding Property Group said the cut is encouraging for aspirant home buyers and those with existing mortgages, particularly as the outlook for interest rate relief has shifted significantly during recent weeks.

This is the third consecutive interest rate decrease, following reductions of 25bps at both the September and November 2024 MPC meetings, bringing the total interest rate relief in this current downward cycle to 75bps.

Golding said that although this month’s (January 2025) rate cut was widely anticipated, the outlook for interest rates for the remainder of the year is far less clear with opinions ranging from no further interest rate relief to one single cut of 25bps. “However, the timing of any further rate cut is also debated with some commentators suggesting March 2025 and others later in the year.”

This would make the current interest rate-cutting cycle unusually shallow, he said. This is largely a reflection of the heightened uncertainty in the current global economy amidst concerns of a resurgence in inflationary pressures which is making many central banks – and the SA Reserve Bank in particular -cautious.

“The stream of executive orders from the US White House is also creating uncertainty, prompting a reassessment of the likely scope for further interest rate cuts in the United States, which has shifted from initial expectations of three 25bps rate cuts to a single cut later this year.

“Fewer US interest rate cuts leave less space for local interest rate relief, and any further rate cuts will be dependent on developments both globally and locally,” said Golding.

Notwithstanding this potential uncertainty sentiment has improved, in general, with the previous two repo rate reductions of a cumulative 50bps in 2024 already creating a ripple effect across the residential property market – increasing uptake, particularly in the lower to middle sectors of the market, while also boosting confidence and activity in the luxury market, according to the agency.

Samuel Seeff, chairman of the Seeff Property Group said the latests cut was simply not enough.

A 50bps cut would have been far more meaningful, he said, adding that there was adequate support for the Reserve Bank to counter the economic stagnation and unemployment risks with a more robust cut.

“The country can no longer afford what is effectively the highest real interest rate in the world – differential between the interest rate and inflation – while the economy is limping along, barely growing, and unemployment is spiking.”

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)

Reserve Bank cuts interest rates by 25 basis points

The South African Reserve Bank (SARB) has reduced the interest rate by 25 basis points, bringing the repo rate to 7.50%.

This decision from the Monetary Policy Committee (MPC) aligns with expectations, as the country’s inflation continues to ease.

Four members of the MPC voted in favour of the rate cut, while two opted to keep rates unchanged.

Inflation in South Africa stood at 3.0% in December, well below the SARB’s midpoint target of 4.5%.

The central bank expects inflation to remain under 4.5% in the first half of the year, although it may rise to around this level later in the year, with core inflation staying within the target range.

Reserve Bank Governor Lesetja Kganyago said inflation appears well contained in the near term.

“However, the medium-term outlook is more uncertain than usual, with material risks from the external environment. Domestic factors such as administered prices are also problematic.”

Inflation expectations continue to align with the SARB’s target, though risks to the inflation outlook remain on the upside due to global factors.

Looking ahead, the SARB forecasts GDP growth of 2.0% by 2027, despite ongoing challenges in the mining and manufacturing sectors, which are still struggling to return to pre-COVID-19 levels.

As growth picks up, the central bank expects improvements in both the primary and secondary sectors, alongside increased investment.

With inflation currently at the lower end of the SARB’s target range, South African consumers can expect further rate cuts in the near term. This would bring the total reduction in interest rates to 0.75% since September 2024.

For consumers, the immediate effect of this cut would be a reduction in monthly debt repayments, including home loans, car loans, and credit card payments.

For example, a 0.25% rate cut would lower the monthly repayment on a R1 million home loan by R515.19.

Commenting on the broader economic sentiment, Herschel Jawitz, CEO of Jawitz Properties, noted that the shift in sentiment since the May 2024 elections, combined with improvements in power supply and lower inflation, has positively impacted the residential property market.

Areas like Gauteng, which had experienced oversupply and stagnant prices, are seeing increased buyer demand. While it may take time for this to result in price growth, further interest rate cuts are expected to fuel positive momentum in the market.