September 19 2025 12:30
SOUTH AFRICA
The SA Reserve Bank (SARB) held rates on Thursday which surprised analysts who expected a cut.
However, the SARB’s monetary policy committee led by governor Lestja Kanyago is known for being hawkish.
The SARB kept the prime lending and repo rates at 10.50% and 7%, respectively. This was disappointing as inflation is well within the target range of 3% to 6% which was introduced in 2000 and most SA consumers are still under pressure.
The hold follows a succession of interest rate cuts from September 2024 to July 2025, with local and global economic developments driving the decision according to the Bank.
Rhys Dyer, CEO of the ooba Group, which is a bond originator, said the announcement should be viewed as a pause or recalibration rather than the end of the rate cutting cycle.
“It gives the SARB time to balance domestic inflation risks with an increasingly supportive global backdrop,” he said.
The SARB is committed to its recently signalled shift toward targeting the lower end of the 3% to 6% inflation band.
But Bradd Bendall, the national head of sales at BetterBond expected the hold.
“Although homeowners would welcome another repo rate cut, we expect the repo rate will hold steady at 7% after the Reserve Bank meets next week. Despite inflation remaining within the target range of 3 to 6%, the recent slide up to 3.5%, its highest level in 10 months, suggests that a further interest rate cut at this time is unlikely. If the Reserve Bank is intent on shifting the inflation target closer to 3%, maintaining the prime lending rate at 10.5% will be necessary for now,” he had said.
Stability supports the long-term goal of reducing production costs, stimulating consumer demand and driving renewed economic growth.
“There are already encouraging signs that we are on track. Absa’s latest Quarterly Perspectives report points to a 0.3% quarter-on-quarter GDP increase, with growth expected to reach 1.6% next year,” said Bendall.
The property market continues to demonstrate resilience. Five interest rate cuts since September last year have helped stabilise conditions. BetterBond’s data shows home loan applications went up 12% year-on-year in July, the highest level since late 2022. House prices have also strengthened, increasing 2.1% year-on-year, while the average price for first-time buyers hit a new high of R1.3m. Both increases outpaced inflation, reflecting continued demand, particularly in provinces such as the Western Cape.
Despite the rate hold, Dyer said ooba Home Loans data pointed to signs of steady recovery following the five interest rate cuts. He highlights some of the key developments as follows:
From January to August 2025, the average overall purchase price recorded by ooba Home Loans came in at R1.68m, marking a 3.4% increase year-on-year. Over the same period, the average purchase price paid by first-time homebuyers increased 4.4% to R1.24m.
“These statistics underpin improved affordability and financial wellbeing amongst consumers,” said Dyer.
Dyer said while the Free State may be home to the lowest purchase price in the country, at R1.16m for January to August 2025, it is in fact the only region registering double digit growth in the average purchase price paid, at 10.7% for the same period.
While there has been an uptick in activity across all major provinces, the uplift in Gauteng is most notable.
“It’s a known fact that the recovery of the national housing market has been driven by the Western Cape at a regional level and by Cape Town at a metro level, but the metro housing markets in Gauteng have also gathered momentum and are now major contributors to the national housing market recovery,” said Dyer, adding that this is particularly evident in the prices paid by first-time homebuyers.
“The recovery in first-time homebuyer house price inflation (HPI) in Tshwane became more pronounced this year, with the average purchase price rising by 11.2% from January to August 2025. In Johannesburg, we have also noted signs of recovery in recent months, with purchase prices up by 11.7% in August 2025 from year-earlier levels,” he said.
As a known interest rate sensitive demographic, the industry has long awaited a rebound in first-time homebuyer demand, which, according to Dyer has become more consistent in 2025.
“August 2025’s figures showed that 47.7% of total applicants were first time homebuyers, close to recent highs, with underlying signs of recovery still intact,” said Dyer.
As much as 59% of first-time homebuyers were able to purchase a home without a deposit, i.e.100% home loan and 10.5% secured financing that also covered their transfer and bond registration costs.
According to Lightstone, Cape Town continued to outperform other major metro housing markets by a wide margin, with purchase prices rising by 7.4% in July ‘25. This was followed by eThekwini (3.3%) and Tshwane (3.0%).
In addition, the banks backed homebuyers in this province, offering a generous interest rate discount of prime less 0.87% in Aug 2025, compared to 0.64% nationally, further fuelling activity.
Looking to the average deposits across the regions, Dyer points to a robust national figure of 14.7% for H1 2025. “As the average purchase price rises, so too do deposits – an encouraging sign that homebuyers are building stronger equity positions from the outset,” he said.
Regionally, the Western Cape leads with an average deposit of 20.3% followed by the Eastern Cape at 15.4%, KwaZulu-Natal at 14.3%, Limpopo at 14.1% and Johannesburg at 13.4%.
Dyer expectsed rate cut relief in November 2025 or early next year. He emphasises that the stability of these cuts play a crucial role in fostering a favourable borrowing environment for both homebuyers and homeowners. “This not only supports confident investment but also helps to sustain the upward trajectory that we are currently on,” he said.
alistair@propertyflash.co.za
