Tag Archives: Seeff

Semigrants boost Cape rental yields, spurs investor interest

Semigration to the Cape has been a major boost for the residential rentals market, especially in areas such as Durbanville which offers more affordability, says Daniela de Villiers, Seeff’s rentals manager for the Durbanville area.

Increased demand has unlocked opportunities for investors and landlords in the area, offering attractive rental yields of 6%-10% depending on the area and property, the expert said.

Average rental rates in the Durbanville and surrounding area range between R9,000 to R25,000, and for luxury homes, upwards of R30,000 per month. Luxury estate homes go to as much as R51,000 and R60,000 per month for homes rented out by Seeff in the Kanonberg and Clara Anna Fontein estates.

Most tenants are relocating from Gauteng, especially the Pretoria region, attracted by the area’s central location, highly regarded schools, and its relative affordability compared to other upmarket suburbs in Cape Town

Durbanville offers convenient access to major routes, safe, well-kept neighbourhoods, and a country-style lifestyle near the Durbanville Wine Valley-appealing to upcountry movers.

The area attracts families, young professionals, and students from nearby medical facilities or those doing practical rotations at local state hospitals

Anneke Roux, another rental agent with Seeff who operates in the Welgedacht area, said the highest demand in Welgedacht is in the R13,000-R20,000 range while yields range from 6-10%.

Schools are a big attraction, according to Allison Oosthuizen, a rental agent. Young professionals are drawn to the good selection of apartments in the area, including those at the Waterfront.

Apartments rent out at R9,000-R11,000 per month which is more affordably priced compared to the Cape Town CBD. Townhouses is a popular alternative as they are also well-priced at R14,000-R18,000.

Even luxury homes at R41,000-R51,000 offer good value compared to other upper end areas.

The opportunity for investors is mostly for properties in the R1.2 million to R2.4 million price range where they can achieve a rental income of R9,000 to R20,000 per month, providing a rental yield of 5-7%.

Seeff cautioned that landlords must keep their prices in line with the market or they could risk not attracting a good calibre tenant within a reasonable period. Pet-friendly properties are always sought-after.

When investing in a rental property, a good location is vital, but landlords must maintain properties in a good condition to optimise the rental and retain good tenants.

The areas of Pinelands and Thornton, closer to the City, report similar trends. Johan Meyer, licensee from Seeff for the areas, said the high demand is due to proximity to UCT, Groote Schuur Hospital, good schools, and access to the airport. Tenants include students, medical staff as well as those working at the Old Mutual offices.

Here too, rental properties are in short supply, and landlords can earn yields of 6-10%. There is high demand for neat, modern accommodation such as the new Pineworx development.

Apartments are renting out at R9,500-R14,000 while houses range from R20,000. The highest prices achieved by Seeff over the last year include R25,000 for a rental in Victory Avenue, R35,000 in Uitvlugt, and R42,000 in Links Drive.

South Africa’s ‘coolest neighbourhood’ where property prices are up 150%

Cape Town’s False Bay coastline is booming – and the numbers prove it.

With major investment by the City of Cape Town into the Muizenberg beachfront, property prices across the Southern Peninsula are surging, drawing interest from residential buyers, investors, and Airbnb hosts alike.

In Kalk Bay for instance, property prices have jumped as much as 150% for sectional title homes over the past five years.

Kalk Bay was not so long ago named the coolest neighbourhood in world in an article published by Forbes.

According to Lightstone data, house and sectional title prices have jumped by 68% and 31.8% respectively this year, from R4.762 million in 2023 to R8m and from R4.55m to R6m, with very little movement in land sales due to lack of availability.

Kalk Bay property prices for instance have seen sectional title homes rising by as much as 150% over the past five years. Once named the coolest neighbourhood in the world by Forbes, this seaside village is now one of Cape Town’s most sought-after addresses.

Lightstone data for 2024 showed that the average freehold home climbed as much as 68% in a single year, from R4.762 million in 2023 to R8 million in 2024. Sectional title properties saw a similarly strong jump, rising 31.8% from R4.55 million to R6 million.

Land sales remained stagnant—not due to lack of demand, but a shortage of available plots in this tightly held suburb.

The improvements – which include the revitalisation of the promenade, enhanced parking facilities, upgrades to Surfer’s Corner, and restoration of heritage structures – are expected to significantly increase the area’s appeal for both residential and investment buyers.

Anton Liebenberg, licensee for Seeff False Bay, said the upgrades will not only attract more tourists but also boost the desirability of the region among homebuyers and investors, including those focused on Airbnb opportunities.

The pandemic years saw tremendous activity in the False Bay property market, and we are now seeing new developments popping up across Muizenberg and neighbouring suburbs.

The False Bay coastline—stretching from Muizenberg to Simon’s Town—has long been a favourite for weekend getaways and holidaymakers.

With Blue Flag beaches in Muizenberg and Fish Hoek, as well as iconic attractions like the penguins at Boulders Beach, colourful huts of St James, and the artsy charm of Kalk Bay, the area blends coastal leisure with rich cultural heritage.

Supply Shortages & Buyer Waiting Lists

The market remains strong, with high demand and a shortage of stock, said Liebenberg. There is even a waiting list of buyers eager to relocate, but many current owners are holding onto their homes for the long term.

In Kalk Bay for instance, 93% of buyers are over 50-years of age. And in Fish Hoek, 50% of residents are under 50-years, but 57% have been in their homes for 11+ years. In Glencairn, buyers are predominantly older, 79% are over 50 and 53% have been in their homes for 11+ years.

He noted that buyers range from young families seeking a healthier lifestyle to retirees and semigration buyers from Gauteng and other provinces.

The rental market is also thriving, particularly in Muizenberg, where surfer culture drives demand for long- and short-term lets.

Rentals range from R12,000 to R23,000 per month, with luxury homes fetching significantly more.

False Bay Property Price Growth: 2020 vs 2025

Area2025 Avg. Price (FT)2025 Avg. Price (ST)2020 Avg. Price (FT)2020 Avg. Price (ST)% Growth (FT)% Growth (ST)
MuizenbergR3.2mR1.5mR1.8mR1.0m+77%+50%
Kalk BayR9.0mR5.0mR4.9mR2.0m+83%+150%
Fish HoekR3.8mR2.1mR1.6mR1.1m+137%+90%
GlencairnR3.0m—R2.3m—+30%—
Simon’s TownR3.7mR2.0mR2.6mR2.0m+42%0%
Marina Da GamaR2.8mR1.2mR2.0mR1.0m+40%+20%
LakesideR2.9mR1.8mR2.0mR1.8m+45%0%

FT = Freehold | ST = Sectional Title | Source: Seeff / Lightstone

Neighbouring Areas Also Booming

Tracey Reid-Daly, licensee for Seeff Southern Peninsula, said areas such as Kommetjie, Noordhoek, and Scarborough are also seeing heightened interest and rising prices, largely driven by semigration and international buyers.

Noordhoek now averages around R9 million, while Kommetjie stands at R6.3 million, with most sales exceeding R3 million.

She attributes the appeal to the area’s wide open beaches, scenic mountain views, and tranquil lifestyle – offering the ideal mix of nature, space, and proximity to Cape Town.

With upgraded infrastructure, a growing reputation among local and foreign buyers, and limited stock driving up prices, the Southern Peninsula—especially Muizenberg – continues to prove itself as one of Cape Town’s most promising coastal property markets.

Housing market shift for South Africa’s Garden of Eden

While freestanding homes still dominate the residential landscape across Garden Route towns, demand for apartments is growing steadily, with new developments finally entering the market, says Gail Rimbault, licensee for Seeff Knysna.

Sectional title complexes offer more accessible price points for buyers and investors, she said.

“They’re particularly attractive for their lock-up-and-go convenience and low maintenance, usually managed by a Body Corporate. This makes them ideal for holiday homes or for buyers downsizing to the coast.

Rimbault noted that while retirees and holiday home buyers continue to make up a significant portion of the market, rental demand – both long-term and short-term – is also rising sharply.

Many investors are purchasing holiday units with the intent of generating rental income when not in use, leveraging the region’s strong seasonal tourism.

The Garden Route remains one of South Africa’s top holiday destinations, drawing heavy foot traffic over weekends, school holidays, and especially during the summer season.

Despite this, sectional title properties still make up a small portion of overall housing stock in most Garden Route towns.

According to Lightstone data, Mossel Bay and Plettenberg Bay lead with 15% each, followed by Knysna at 10% and George at just 6%.

Prices for apartments typically start above R2 million, with luxury units commanding even higher premiums.

Sectional Title Property Snapshot – Garden Route

TownST Stock %Avg. ST PriceAvg. Luxury ST Price
Mossel Bay15%R2 millionR3.6m – R3.8m
Plettenberg Bay15%R2.9 millionR5 million
Knysna10%R1.5m – R2mR4 million
George6%R1.6 millionR3.9 million

Source: Seeff / Lightstone

Although sectional title accounts for just 10% of Knysna’s housing stock, it made up around 20% of total sales in the past year-highlighting the high demand for compact, low-maintenance units in the town.

Apartments are increasingly popular for both primary living and holiday rentals, including Airbnb.

Developers are responding to this trend with new offerings like the Seahorse development in Knysna, which Rimbault says is a welcome addition to the market.

The Seahorse offers 35 modern units with one or two bedrooms, private braai balconies, secure parking, inverters, and Wi-Fi.

The complex includes a heated swimming pool and sun deck, with prices starting at R1.75 million for one-bedroom units and R2.325 million for two-bedrooms. No transfer duty is payable.

These apartments are drawing interest from a diverse range of buyers—from retirees and downscalers to investors looking for holiday homes or short-term rental income.

The silent killer when it comes to selling your property

The property market in South Africa is finally beginning to move at a quicker pace, says the Seeff Property Group.

The price is usually the main draw card of a property and, if not priced correctly and offering value compared to the hundreds of properties available to buyers, it can delay the sale, said Tiaan Pretorius, manager for Seeff Centurion.

Determining the correct asking price when a property is listed on the market for sale is often one of the most difficult issues. Gerhard van der Linde, MD for Seeff Pretoria East pointed out that sellers tend to have a much higher expectation of the worth of their property compared to the market realities. The biggest risk for sellers is that serious buyers tend to overlook an overpriced property, resulting in lost opportunities.

The reason for the higher price expectation is often that the seller actually needs to make a particular profit. It is therefore vital for the seller to be upfront with the agent about their financial needs.

Van der Linde said that this is particularly crucial if the sale must be completed urgently. The agent can then advise the seller on what can realistically be achieved within a particular timeframe.

How is the asking price determined?

Pretorius said the main tool used by property agents to determine a suggested listing price is a Comparative Market Analysis (CMA). This analysis considers recent sales of similar properties in the area, as well as those listed on the market. It compares like for like in terms of property size, condition, and features, to establish a realistic price benchmark.

Various factors determine the asking price. These include the location and amenities in the area, size and condition of the property, demand for the particular property type and style, demand for the area, and current economic and market trends.

The property is also assessed in relation to other properties in the neighbourhood. For example, the property might have desirable extras such as a braai room and a swimming pool which could entice buyers to pay slightly more for the home.

Elaborate extras are, however, not a guarantee of a higher price. That is one of the main reasons why property agents caution against overcapitalising, said Pretorius.

Overpricing

Given that property listings are now all online, buyers have access to all properties on the market. Van der Linde says that buyers can therefore immediately assess the choice of properties available in their desired price band, and will likely only contact those which appear to offer value for money.

It follows that a property which stands out as overpriced will be overlooked. The result is that it will attract fewer buyers, if any, and could consequently stay on the market for longer.

Overpricing in relation to the market will simply drive potential buyers to competing properties. Buyers usually look in particular areas because it fits with their affordability. If the price is out of step with peer properties, it will simply drive buyers to competing properties on the market.

You may then end up having to reduce your asking price which might also be off-putting to buyers. Price drops can have a negative impact as it can create the impression that the seller is desperate which can lead to lower offers.

Van der Linde says decades of experience has shown that rather than attracting a higher price, an overpriced property may end up selling for lower than what it would have if priced correctly at the outset.

Getting the right property value is essential in real estate, as it attracts buyers and increases profits. Artificial Intelligence (AI) has transformed property valuation, making it more accurate and data-driven.

AI doesn’t just look at the sale prices of similar homes; it can also be used to analyse factors like local crime rates, available amenities, and current market trends, providing a deeper, more holistic understanding of a property’s value.

“Artificial intelligence is a game-changer in real estate investment, offering powerful tools for property analysis, market predictions, and even automated property management,” said Arnold Maritz, co-principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay.

“AI-powered predictive analytics use historical and real-time data to forecast future market trends, which helps investors make data-driven decisions.

“For instance, AI algorithms can analyse data from a wide range of sources, including economic indicators, property sales history, local infrastructure projects, and even consumer sentiment, to predict property values and rental prices.

“And by identifying market trends earlier, investors can capitalise on opportunities whilst avoiding riskier investments like areas with declining value.”

One of the most time-consuming aspects of the service provided by property professionals is the due diligence required to be able to advise both sellers and buyers on ‘value’ for a specific property.

AI-driven valuation models simplify this process by analysing similar properties, taking into account factors like location, property size and condition, to deliver real-time estimates of value.

“International companies like Zillow and Redfin are already using this tool to provide ‘instant’ property valuations based on massive datasets, helping buyers make quick and accurate assessments as they browse online.”

Big data is reshaping property investment by offering insights into markets, demographics, and property performance and this data-driven approach helps investors make better decisions and personalise their investment strategies.

Roadblock for South Africa’s property market growth

House price growth, especially outside of the Western Cape, has largely been dismal over the last two years. After growing at rates of between 5% and 9% in the 2020-2022 period, it declined to as low as 0.5% by mid-2024, notes Samuel Seeff, chairman of the Seeff Property Group.

He said that interest rates have had a major impact on the property market, and on house prices. Interest rates also impact the ability of people to afford their own homes and are an important measure of the health of the housing market, and the broader economy.

When interest rates are high and incomes remain stagnant, buying property becomes increasingly difficult. This dampens demand, resulting in less competition for properties, which helps keep prices lower.

Conversely, if the interest rate comes down and incomes grow, then property becomes more affordable, it becomes easier to obtain home loans, and more people can buy property.

Competition for properties on the market increases, and buyers are then inclined to offer higher prices, resulting in higher price growth.

Seeff said this is well demonstrated when looking at house price trends since March 2020 with the onset of the Covid pandemic. In March 2020, the interest rate was at 9.75%. The Reserve Bank then introduced a series of rate cuts between March and July bringing the prime rate down to 7%.

This immediately made properties more affordable, bringing down the monthly repayment on a R1 million home loan over 20-years to R7,753 per month. The consequent increase in demand resulted in national house price growth for the 2020-year of 4.10%.

The subsequent incremental increases in the interest rate from late 2021 then brought the prime rate to 11.25% by May 2023. This resulted in the monthly repayment on this R1 million home loan increasing to R10,493 per month, thus an additional R2,740 per month.

Property affordability declined, and with that the demand for property in the market. National house price growth consequently declined to just 0.7% for the 2023-year, according to the StatsSA House Price Index.

While further interest rate cuts since late last year has brought the prime rate down to 11%, the repayment on the R1 million home loan has only come down to R10,322, thus resulting in a saving of R171 per month.

National house price growth remained flat at about 0.8 for the 2024-year, according to FNB data.

While there has been an increase in activity in the property market, and confidence in the market has soared to the highest levels in a decade according to an ABSA survey, data from FNB shows that house prices have only increased by 1.1% in January. “Clearly more rate cuts are needed,” said Seeff.

Seeff says there is ample reason for the Reserve Bank to provide further interest rate relief to consumers, the economy and property market next week. The interest rate is still well above what it was in early 2020, i.e. before Covid, yet inflation is at around 3.2%, near the bottom of the Reserve Bank’s target range of 3%-6%.

A lower interest rate will provide a vital boost to the economy and housing affordability, drive higher demand, and consequently boost house price growth, he said.

Strong house price growth is vital to encourage further investment, and development growth. “A healthy housing market with strong growth delivers a multiple of economic benefits, including boosting economic and jobs growth as well as government revenue in the form of taxes.”

This coastal town in the Cape outpaces rivals in wealth migration and luxury home sales

This coastal town in the Cape is outpasing its rivals for wealth migration

Luxury property buyers are not only heading to Cape Town for spectacular homes, but are now increasingly investing in Hermanus, according to Paul Kruger, licensee for Seeff Hermanus.

The last five years has seen a notable rise in sales over R5 million with at least 26 homes sold for over R20 million to R40 million in Kwaaiwater, and R47 million in Voëlklip.

The semigration influx trend has seen a notable rise in wealthy buyers investing in residential, retirement and second homes.

A New World Wealth Report notes that there’s been a 25% increase in high-net-worth individuals who have migrated here, primarily from Gauteng, but even nearby Cape Town.

This significantly surpasses the wealth growth of Cape Town (10%), the Winelands (18%), and Garden Route (22%).

Lightstone data reveals that Hermanus leads in both transaction volume and value among the five largest smaller coastal towns—Hermanus, Jeffreys Bay, Knysna, Plettenberg Bay, and Ballito. In the 12 months leading up to January 2025, Hermanus recorded 808 transactions valued at over R2.6 billion.

Sales of houses priced over R5 million have more than doubled over the last five years from 57 transactions in 2019 to 132. Hermanus is now also competing with Plettenberg Bay in the high value category with some 26 residential homes sold for over R20 million over five years.

The laid-back cosmopolitan coastal lifestyle, and low crime rate are key attractions, but the town is not short of amenities with new private schools such as Curro and Generation Schools, a regional mall, healthcare and more.

Aside from being one of the top destinations in the world for whale watching, Hermanus also offers the growing Hemel-en-Aarde Wine Valley with over twenty wineries, including the sought-after 200-hectare Benguela Cove Lagoon Wine Estate which includes spectacular homes.

Kruger said buyers no longer need to head to the Winelands for a home on a working wine farm as Benguela Cove offers the best of both, vineyards and the lagoon setting. It sits on the banks of the Bot River Lagoon with scenic water and mountain views, vineyards, and olive trees.

The estate is a real eyecatcher attracting luxury buyers looking for residential and second homes. The plots are large (up to 4,000sqm), and the luxury houses are priced to R25,875m for a premium, 700sqm home with views from every room.

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)

The argument for a 50bps rate cut this week

The property sector has come out in strong support of a robust and decisive interest rate cut.

Samuel Seeff, chairman of the Seeff Property Group says the Reserve Bank must consider a minimum 50bps this week to counter the rising growth and unemployment risks.

“The time to be bold is now. We have the highest real interest rate in the world, while the economy is limping along and barely growing. Meanwhile unemployment has climbed to an astronomical 32%, higher when other factors are considered.”

Economists anticipate that the South African Reserve Bank will reduce interest rates by 25 basis points at the conclusion of its monetary policy meeting this week, bringing the repo rate to 7.50% and the prime rate to 11%.

If implemented, this would mark the third consecutive rate cut, following a total reduction of 50 basis points in the Reserve Bank’s previous two meetings in 2024.

Seeff said it makes no sense for the bank to persist with an interest rate policy concerned about inflation at between 3% to 6% when, clearly, the most important element for the country must be GDP growth, and with that greater employment.

Another 25bps rate cut is simply not going to provide the urgent growth boost that is needed, said Seeff. While the bank will likely look to protect the exchange rate, and be concerned that if the US does not drop its rate and we do, people may shift money there, and inflation may go up due to the weaker exchange rate, he said there is a strong counter-argument.

“We need GDP growth and unemployment to decrease, and you cannot do it with these high interest rates. Not addressing the growth and unemployment crisis poses a far greater risk to South Africa.”

Seeff pointed out that the bank has previously stepped in to provide interest rate relief during the Covid-pandemic, and should do so again. “The risks are simply far bigger than protecting the exchange rate. The biggest risk right now is not inflation, but low to no growth and rising unemployment.”

Cuts will be good for the economy, the country, and property market, he said. “It will also be good for reinvestment stimulation. If the economy grows, you may very well have the offset between those who are not investing in South Africa or who, because of our weak interest rate return, might be motivated to rather invest in a growing South Africa.”

“The exchange rate may then, in fact, get stronger again, so it’s not guaranteed that an interest rate cut will do damage to the exchange rate.” Seeff also expressed concern that there seems to be an appetite to keep the interest rate higher for longer with only two rate cuts of 25pbs each this year.

He reiterated that there needs to be at least four cuts of 25bps each, kickstarting with a 50bps cut this week.

“We have seen a pickup in momentum in the property market off the back of the two rate cuts late last year, and that momentum needs to continue. It should be encouraged and pushed, and can only be done with a lower interest rate. Now is not the time for a conservative approach in South Africa, the Reserve Bank needs to be bold,” Seeff said.