March 25 2025 10:10
This is a guest article for Tyson Properties.
SOUTH AFRICA
An intricate balancing act is how Tyson Properties CEO, Chris Tyson, describes the current state of play within South Africa’s property sector following today’s decision by the South African Reserve Bank Monetary Policy Committee to pause interest rate cuts, leaving the benchmark rate at 7.5% and the prime lending rate at 11%.
Although Tyson predicted a series of rate cuts between September last year and mid-2025, this halt in no way means that the interest rate easing cycle is at an end, he said.
The Reserve Bank has cut interest rates three times since September 2024. Although, individually, each 25 basis points cut did not have a major impact on home financing, the combination of three consecutive cuts is still beginning to have a positive impact and is sparking improved market sentiment.
Tyson said that with consumer inflation remaining unchanged in February 2025, this remains within the Reserve Bank’s favoured target band, which opens the way for rates cuts later this year. With fuel prices holding steady together with the rand despite US President Donald Trump’s decision to expel the South African ambassador from the country, there should be interest rate relief down the line.
Transfer duty adjustments announced in the government budget are a positive signal for property investors, especially those entering the market for the first time. Buyers at the bottom end of the market will not have to pay transfer duties on properties below R1.21m.
Although the VAT increase will not directly impact property sales, it will place pressure on peripheral costs such as legal fees, agent commissions, home related services and construction. Already, month-on-month inflation has accelerated because of increased pressure on the prices of food and financial services and the VAT increase is expected to exacerbate this.
Buyers and sellers should balance the leeway afforded by the previous rates cuts against other factors that could affect household disposable income, including the proposed increase in VAT and upcoming hikes in electricity tariffs in April.
In the short to medium term, it is important for sellers to price their properties correctly to attract the now growing pool of more optimistic buyers in most markets across South Africa. On the flip side, buyers need to exercise caution and stay well within their means when purchasing new properties, but can be more confident knowing that a more positive market is already paving the way for an improvement in property values.
247@propertyflash.co.za