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.