Will November bring another interest rate cut? Insights and predictions

The recent decline in the consumer price index (CPI), albeit marginal and firmer rand, brings hope of another cut in the prime lending rate (via the repo rate) in November.

With a strengthening rand holding inflation in check, there’s a strong possibility of another interest rate cut before the end of the year, says Bradd Bendall, BetterBond’s national head of sales.

“A firmer rand helps contain inflation, keeping consumer prices within the lower end of the Reserve Bank’s 3% to 6% target band.”

This is despite the Monetary Policy Committee (MPC) of the South African Reserve Bank missing another opportunity at the end of September to reduce the cost of home loan financing, according to the October 2025 BetterBond Property Brief.

“Over the past year, a consistent decline in the construction input price index (CIPI), combined with an increase in the residential property price index (RPPI), has narrowed the buyers’ market range, which earlier reached a peak in the second quarter of last year. 

"This development is a clear sign of improved demand from prospective homebuyers, while the reduction in building costs is in line with a record low for the country’s producer price index.” 

Over the past year, the strongest growth in demand for homes has come from buyers earning less than R15 000 a month, according to BetterBond.

These buyers are most likely to react positively to lower interest rates, explains Bendall. House prices for this income group have therefore increased by 9%. Also encouraging is the year-over-year increase in average home prices for all buyers.

Since 2019, home prices have increased by10.7% and by 8.7% for first-time buyers, underscoring the confidence in property as a sound investment, says Bendall.

This month’s data is said to offer a snapshot of South Africa’s evolving home loan and residential property market as confidence strengthens following five consecutive interest rate cuts. 

The annual consumer price inflation was 3.3% in August, down from 3.5% in July, decreasing by 0.1% month-on-month in that month.

Rate reduction impact

According to the brief, the positive impact of the lower prime rate on the residential property market has been reflected in the third quarter data, underpinning the BetterBond index of home loan applications. 

In reaction to the five successive cuts of 25 basis points each in the Reserve Bank’s repo rate (which automatically feeds into the prime lending rate), the BetterBond index of home loan applications increased by 11.6% quarter-on-quarter and 14.6% year-on-year during the third quarter this year. 

Since bottoming out in the last quarter of 2023, the number of home loan applications is said to have increased by 26%, although it remains 15% lower than during the first quarter of 2022, when the Reserve Bank started to follow a restrictive monetary policy stance and the prime rate eventually increased to a 15-year high of 11.75%.

“With inflation remaining at the bottom end of the Reserve Bank’s target range, another interest rate cut may occur before the end of the year.” 

During the past 12 months, Gauteng ruled the roost for the number of home loans granted, with Johannesburg’s South-Eastern suburbs, Greater Pretoria and Johannesburg’s North-Western suburbs enjoying the number one to three rankings, respectively, for YOY growth Johannesburg’s South-Eastern region also consolidated its number one position for the total number of home loans granted, with a total of 5 265.

For all regions combined, the  YOY increase was described as impressive, namely 17% – a clear sign of resurgence in the residential property market. This trend was attributed to lower home loan rates, with three cuts in the official repo rate thus far in this year.

“It is encouraging that eight of the nine regions experienced increases in the number of home loans granted.” 

Homebuyer incomes 

The data print says one of the most notable trends in the residential property market over the past four years has been the steady increase in homebuyer incomes, with similar growth patterns among both first-time and repeat buyers.

Since 2021, the monthly incomes of all buyers are said to have increased by an annual average of 9.1%, outstripping the change in the consumer price index by a healthy margin.

For FTBs, the annual average increase in incomes amounted to 8.5%, also well above the average annual inflation rate over the past four years.

“It is also encouraging that growth in average household incomes have kept pace with the incomes of individual buyers. During September, this value was R95,000, which will, in all likelihood, exceed R100,000 during the fourth quarter, when many households receive year-end bonuses.”

Average home purchase price

During the third quarter of this year, the average home purchase price for all buyers reached a new record high, breaching the level of R1.6 million for the first time.

For first-time buyers (FTBs), the average price during the third quarter also moved to a new record high of marginally higher than R1.3 million. The year-on-year increase in average home prices for all buyers and FTBs was 2.2% and 2.9%, respectively.

The brief pointed out that these growth rates are marginally lower than the current consumer price index (CPI), saying this confirms the continued existence of a buyers’ market for residential property, although the gap between the price increase for homes and the CPI is shrinking.

“Since the second quarter of 2019, the average home price for all buyers increased by 10.7% and for FTBs by 8.7%, providing proof of the soundness of an investment in residential property.” 

According to Statistics South Africa, the annual national residential property price inflation was 6.1% in May this year, an increase from a revised 5.8% in April 2025. The residential property price index (RPPI) increased by 0.5% month-on-month in May.

Building plans

During the first seven months of this year, the Western Cape consolidated its number one position for the value of residential building plans passed by the metros and larger municipalities in South Africa. Gauteng remains in second place, followed by KwaZulu-Natal.

The total value for all provinces was R26 billion, marginally lower than for the same period last year. The attractiveness of the Western Cape as a permanent residence destination is said to be illustrated by the fact that 38% of the value of all residential building plans passed currently emanate from this province, while it has also recorded double-digit YOY growth.

Although the Eastern Cape enjoyed the highest YOY growth in the value of building plans passed between January and July (17%), this occurred from a base that was 87% lower than in the Western Cape, the brief says. 

On a positive note, it is encouraging that the Ministry of Cooperative Governance and Traditional Affairs has unveiled plans for the most significant restructuring of local government in three decades, says Dr Roelof Botha, an economist and advisor to the Optimum Investment Group.

“Effective implementation of major reforms to local governments could eventually act as a catalyst for construction activity in the designated municipalities, while also addressing the pressing housing shortage.” 

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