Cape Town - A possible interest rate cut on Thursday could give consumers impetus to start spending, but it still wouldn’t be enough to see a drastic uptick in home buying, according to experts.
There remains mixed feelings from economists about whether the cut will indeed be announced and if so, how big; however, most are predicting a 25 basis points cut.
In November, the SA Reserve Bank cut the interest rate by 25 basis points.
The interest rate fell from 8% to 7.75%. This meant that the prime lending rate dropped from 11.5% to 11.25%.
The National Debt Counsellors’ Association chairperson, Benay Sager, said money owed to the banks, in terms of mortgages, made up the bulk of consumer debt overall at the start of 2025.
He said the rest will be money owed to vehicle financiers, as well as unsecured debt. “From a residential property perspective, homeowners would be most impacted by changes in the interest rates.
“Often bonds and mortgages have a 20-year life cycle and they are very susceptible to any changes in interest rates, so I think the biggest thing to watch is where the interest rate will go,” Sager said.
Investec chief economist, Annabel Bishop, said the Government of National Unity had inspired a lift in business confidence, adding to the momentum for growth in property.
“The commercial and residential property sectors are expected to both see accelerating growth in South Africa leading out to 2030.
“This outlook is based on an expected improvement in GDP growth, further interest rate cuts, and moderate inflation,” Bishop said.
On the other hand, the University of Pretoria’s Professor in Real Estate, Douw Boshoff, said although there were more positive views on the economic situation in the country, including growth forecasts and interest rate reductions, the international uncertainty is dampening the optimism.
He said the property market is in need of solid economic growth to overcome the recent downturns, which is currently not sufficient to create a significant positive impact on the market.
“Although the property market is expected to continue some improvement, it is coming from a low base after Covid, and is struggling to fully recover due to poor fundamentals.
“The recovery is not enough to create a stimulus for down the line sectors like construction, which generally provides a lot of jobs.
“So although some growth is expected, it is considered to be modest if significant corrective action is not taken by the local government at least,” Boshoff said.
Standard Bank’s Home Services said there is stock available in the market and they currently still see this as a buyers’ market in most provinces.
The Western Cape on the other hand remains an anomaly, with high levels of demand and higher levels of property price growth, they said.
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