South African Reserve Bank (SARB) governor Lesetja Kganyago on Thursday announced a 25-basis point cut to the repo rate, lowering it to 7.00% following the July meeting of the Monetary Policy Committee (MPC).

The cut brings the prime lending rate down to 10.50%, easing borrowing costs across the board.

The decision was unanimously supported by the MPC and came just hours before the United States – under President Donald Trump – imposed a 30% tariff on selected South African exports.

Tyson property group said that the MPC’s decision will give South Africans good reason to be optimistic despite the “gathering storm clouds” around tariffs.

Samuel Seeff, chairman of the Seeff Property Group, also welcomed the news. Seeff said it is the correct decision given that inflation (at 3% for May) is below the Bank’s target range, and the currency has been stable, trading at times below R18/USD.

While this cut brings welcome relief for consumers by reducing borrowing costs and putting more money back into their pockets to spend in the economy, Seeff said it is still not enough. More needs to be done to really give the economy the rocket boost that it needs.

“Nonetheless, the rate cut will make home loans will more affordable and property buyers will find it slightly easier to qualify, thus opening more doors to homeownership. The total rate cuts since September means that the interest rate will now be 1.25% lower compared to last year.”

The repayment on a bond of R1 million (over 20-years) will therefore now be reduced by around R853 per month.

“We would therefore certainly encourage buyers to take advantage of the opportunities in the market,” Seeff said further. Higher demand and improved house price appreciation at around 3.7% nationally – topping inflation for the first time in two years – also provides incentive for sellers, especially since many areas are in need of more property listings, he said.

Tyson Properties CEO, Chris Tyson, welcomed the drop amid the lingering uncertainty about the actual impact of ongoing geopolitical conflict and tensions on the local economy.

“There is always the risk that we remain so focussed on the ongoing negatives that we fail to see the many positives. We should not forget that the current interest rate environment continues to offer both those entering the property market and those who are repaying loans on properties the best borrowing conditions in years,” he said.

Taking a longer-term view, Tyson Properties director, Francois du Toit said that households across the world are likely to remain under pressure. He says the new ‘worldwide norm’ is for people to be more mindful of their budgets.

The property firm said that this is likely to mark the end of the rate cut cycle, leaving homeowners to look at tighten their purse strings in order to plug budget leaks and bring disposable income back to acceptable levels.

Many economists expect no additional cuts for 2025.

Greg Dart, director of High Street Auction Co said the latest move will inject some positivity into the economy.

“However, one has to accept that global economic turbulence will continue. Right now, the only certainty is uncertainty and investors in the commercial and industrial markets have already factored in much of the turbulence when considering investments.

“The reality is that no-one really knows the exact impact of the imposition of tariffs by one of the country’s largest trade partners,” said Dart.

Just as tariffs might lead to increased job losses and fully realise predictions that economic growth will be below the 1% mark this year, these be the so-called last straw that sparks government and even the private sector to re-ignite long overdue industrialisation and growth in manufacturing.

“Interest rate cut or no interest rate cut, the ongoing uncertainty is likely to continue to push real estate into a difficult patch,” he said.

However, this creates opportunities for serious investors to take up opportunities. In effect, this is likely to create a price maker rather than a price taker market which facilitates price discovery and liquidity through auction.

It would be realistic to expect more businesses to resort to business rescue or restructuring, said Dart.