Real Estate Investment and Market Growth Concept. Analyzes real estate market growth trends. Graph show rising house price, interest rate, property mortgage, loan home, and investment opportunities.
The real estate market has welcomed the 25-basis-point repo rate cut, citing that this is a boost for the real estate market.
South African Reserve Bank (Sarb) Governor Lesetja Kganyago announced on Thursday that the Monetary Policy Committee decided to cut the repo rate to 6.75%.
ALSO READ: Step inside South Africa’s wealthiest township
Repo rate cut meaningful for homeowners
Berry Everitt, CEO of the Chas Everitt International property group, said the repo rate cut will be very meaningful for consumers, especially since it has been combined with a significant decline in the rate of inflation.
“For existing homeowners, for example, every rate reduction translates into lower monthly instalments on all types of debt as well as their home loans, and more money in their pockets,” he said.
“A homeowner with a R1.6-million bond, for example, is now paying at least R1 500 less per month, less than they were before the rate-cutting cycle started, which represents a significant easing of pressure and a chance to significantly improve their financial position.”
Repo rate cut, perfect for first-time buyers
He added that the latest repo rate cut strengthens the position of prospective purchasers, especially first-time buyers, who have the most sensitivity to changes in monthly affordability.
“Bond qualification in South Africa still generally follows the well-established rule that monthly repayments should not exceed 30% of a household’s gross income, so when interest rates fall and minimum monthly repayments decrease, prospective buyers can qualify for a larger loan on the same salary.
“Even better, they can choose to still buy a less expensive property and enjoy a comfortably lower monthly instalment. If they wish, they may also be able to pay more than the minimum instalment each month and derive huge future benefits by paying off their bonds in a much shorter period and saving many thousands of rands worth of interest.”
ALSO READ: Is a Rolex really a better investment than property?
A bigger affordability window
Everitt said using the current average first-time buyer purchase price of R1.6 million, the drop in the prime rate from 11.75% to 10.25% substantially widens the affordability window.
“At last year’s higher rates, many aspiring buyers found that the repayments required would push them over the 30% threshold, preventing them from securing a home loan. With rates now 1.5% lower, far more households fall within the qualifying range, giving them a real opportunity to enter the property market.”
He added that the benefits will compound further if households receive salary increases next year, even if these are relatively modest in line with declining inflation. “A higher income combined with lower interest rates is the perfect scenario for improving affordability, boosting bond applications and creating long-term financial security through property ownership.
A boost in the future of the economy
Stephen Whitcombe, MD of the Firzt Realty group said the repo rate cut will boost people’s confidence in the future of the economy, especially as it comes hot on the heels of SA being taken off the grey list and being given an improved sovereign debt rating by S&P.
“Consequently, we expect to see a steady increase in sales activity over the next few months.” He added that the first-time buyer sector is likely to be the busiest in 2026.
“Figures show that they already account for almost 50% of all bond applications now, and we think this will be closer to 60% next year. However, there are also more buyers now in the luxury sector, and especially in gated estates, while the middle-income/ medium-price market is shrinking.
ALSO READ: Has Cape Town become too expensive for South Africans?
Downsizing trend
Whitcombe said they are seeing a strong trend towards downsizing in the middle-income market to limit the effects of rapidly rising running costs.
“Local authority water and electricity price increases have been above inflation for several years, and the costs of food, fuel, insurance, security and maintenance, as well as municipal rates, keep rising, albeit more slowly now, so an increasing number of suburban homeowners are finding themselves house rich and cash poor.
“We think this will continue to drive strong demand for more modern, compact and lower maintenance properties in complexes and estates where many costs are shared and systems are in place to reduce water and electricity bills. It will also drive more densification, as owners subdivide large suburban stands to cut costs, or sell their larger properties to developers planning to build apartments, townhouses and clusters.”
Rental sector
He added that they foresee the rental sector will thrive and become increasingly attractive to investors, because there is a huge number of households that may well have more disposable income now due to the cuts in interest rates, but are still looking to rent for various reasons.
“The latest Absa Homeowner Sentiment Index shows, for example, that at least 25% of current tenants are not considering buying at present,” said Whitcombe.
“Some are still paying down big debts from the high-interest, high-inflation years, while others are seeking the flexibility to move in pursuit of good employment opportunities or to be close to family.”
NOW READ: First-time home buyer? Here are the answers to all your questions
About the Author
