Property groups have raised concern about the decision to leave the interest remaining unchanged at 7.5% following the latest Monetary Policy Committee (MPC) meeting on Thursday.
Samuel Seeff, chairman of the Seeff Property Group, said that the decision by the Monetary Policy Committee of the SARB to retain the interest rate at the current level of 7.5% (prime rate at 11%) is disappointing and a missed opportunity to provide vital relief to consumers and property buyers.
“Despite the decision by the US Fed to retain its interest rate at the current level, usually an indicator of which way the SARB may go.There were compelling reasons and an opportunity for the Bank to step in with an interest rate cut, not just of 25 bps, but even a more meaningful cut of 50 bps.”
Seeff added that the news that inflation remained 3.2% for February provides further support that there is a window of opportunity given that inflation remains contained near the bottom of the Bank’s inflation target range.
“It is regrettable that the Bank did not take advantage of the economic benefits which could flow from a lower interest rate in the current climate. Notably, the interest rate is still 100 bps above the pre-COVID level while inflation has come down considerably, now at 3.2% for the last two months compared to the average of 4.4% for 2024, and 6% average in 2023.”
Seeff said that keeping the rate so high for so long continues to do more damage than good to the economy, especially when it needs vital stimulus to boost growth and job creation. “The lack of which poses a far greater risk than inflation. Households are already burdened by the higher cost of credit, including home loans, on top of further Eskom tariff, VAT, and tax hikes.”
Dr Andrew Golding, chief executive of the Pam Golding Property Group, said that with the February 2025 consumer inflation rate unchanged at 3.2% below market expectations, the Monetary Policy Committee’s decision not to reduce the repo rate was disappointing for existing mortgage holders and aspiring home buyers. “This means that the SA Reserve Bank repo rate remains 7.5%, while the prime lending rate stays at 11.0%. While economists were divided ahead of the MPC's decision, some argued that given the sluggish state of the local economy, real (inflation-adjusted) interest rates are too high, suggesting scope for further interest rate relief.
Those analysts who predicted no cut at today’s MPC meeting were generally forecasting further interest rate reductions later in the year when – it is hoped – there is more global economic certainty, and as long as inflation remains contained.”
Golding added that a large petrol price cut is anticipated in April, currently estimated at around 80-90c per litre, which could further help to dampen inflation. “For existing homeowners and residential property investors, there is comfort in the fact that national house price inflation has risen steadily from a low of 2.2% in late 2023 to +6.22% in February 2025, according to the Pam Golding Residential Property Index, which is the strongest growth rate in national house prices since late 2007. This rebound has also outpaced the turnaround in the consumer inflation rate from a low of 2.8% in October 2024 to 3.2% in February 2025, resulting in real (inflation-adjusted) growth in house prices for six consecutive months. Real house prices rose by +3.0% in February 2025, a level last seen in September 2007.”
Jonathan Kohler, Founder and CEO of Landsdowne Property Group, said that in an environment of rising living costs, affordability remains a major factor. “The MPC’s decision to hold interest rates and concerns over economic growth will likely impact investor sentiment in the short term, as buyers adopt a wait-and-see approach.”
Kohler added that potential buyers in certain market segments may opt to continue to rent, due to the added certainty provided by a fixed-cost lease. “Upcoming changes to transfer duties could, however, stimulate buying activity in the more affordable segments of the property market. While transfer duties have risen by about 10%, those purchasing properties valued up to R1.210 million will be exempt from paying transfer duty, starting from 1 April 2025. This marks an increase from the previous threshold of R1.1 million.”
Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, said that it was a missed opportunity for the SARB not to cut interest rates at this meeting. “While I acknowledge the risks to our inflation expectations, I still think that the SARB acted too cautiously. A rate cut would have provided much-needed relief to consumers who might be facing increased financial strain due to key decisions announced in the Budget Speech. An interest rate cut at this time could have offset some of this potential strain and create greater opportunity for economic growth – which is something our country desperately needs.”
BUSINESS REPORT