Property Market Update:

Property Market Update January 2025

The South African Reserve Bank has just CUT interest rates again by another 0.25%, bringing the banks’ prime lending rates down to 11%. This is great news, but how will it actually impact YOU, and what does this mean for sellers, buyers, AND property prices in South Africa.

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This rate cut will offer much-needed financial relief to both homeowners and potential buyers. But what does this mean for serious property sellers, buyers, and overall property prices in South Africa? Let’s take a deeper look.

Impact on Property Sellers:

For sellers, interest rate cuts can be both an opportunity and a challenge, depending on their specific situation.

✔️ More Active Buyers – One of the most immediate effects of lower interest rates is an increase in buyer activity. With lower borrowing costs, more people qualify for home loans. This could lead to higher demand for well-priced properties, making it easier for sellers to secure favorable deals.

✔️ Even Better Selling Prices in High-Demand Areas – In areas where demand is already strong, lower interest rates can drive property prices upwards, because there is more competition between buyers, especially in desirable suburbs.

❗ BUT the flip-side of the coin is also true – With the economy still recovering, some homeowners who previously delayed selling due to financial uncertainty, may now list their homes in anticipation of stronger buyer demand. This could then increase the number of properties coming on the market, which may create more competition among sellers, thereby balancing out the supply and demand equation, and keeping prices in check.

✔️ For many homeowners Downsizing or upsizing Becomes More Feasible – Many homeowners looking to downsize, upsize or relocate may see this as the right time to sell, as a larger pool of buyers increases the likelihood of getting their asking price.

Impact on Buyers: Is This the Right Time to Buy?

For buyers, the lower interest rate environment presents an attractive opportunity – but it also requires careful consideration.

✔️ Lower Monthly Bond Repayments – The biggest advantage of a rate cut for buyers is reduced home loan repayments. On a R2 million bond over 20 years, a 0.25% rate cut could save buyers around R340 per month – a significant amount over time.

✔️ Buyers have More Buying Power – Lower interest rates can also increase a buyer’s affordability, meaning they may qualify for a slightly higher loan amount now than they did before. This allows buyers to consider properties in a higher price range that may have previously been out of reach.

❗ BUT there is also a flip-side to this coin – As affordability improves, more buyers enter the market, so there is More Competition for Properties, which means good properties may sell faster and eventually lead to prices increasing. Buyers will probably need to act decisively, particularly in sought-after areas where demand already outstrips supply.

✔️ First-Time Buyers May Benefit the Most – The lower rates makes this a great time for first-time buyers to enter the property market due to higher affordability, and taking into account that the general expectation is more rate reductions later in the year, which could lead to property prices rising even further. But also always be mindful of potential rate increases in future that will affect your monthly repayments, even if rate increases seem unlikely in the near future.

Impact on Property Prices: Will They Rise, Fall, or Stay the Same?

The effect on property prices will depend on how supply and demand interact over the next few months. Here are the most likely scenarios:

📈 In High-Demand Suburbs: Prices are likely to experience moderate growth as increased buyer activity pushes up competition for well-located properties. Sellers may find themselves in multiple-offer situations, especially in areas with good schools, security, and amenities.

📉 In Oversupplied Areas: If more homeowners decide to list their properties due to better market conditions, some areas may experience a rise in available stock. This could keep price growth slow, as buyers will have more choices, preventing properties from appreciating too quickly.

📊 Overall Market Trends:

Entry-level properties (below R1 million) will likely see increased demand from first-time buyers, as banks start offering more competitive lending terms.

Mid-range properties (R1 million – R3 million) are likely to benefit the most, as this is the price range most affected by affordability shifts.

Should You Buy or Sell Now?

We do not have a crystal ball to see what the future holds, but my personal opinion is:

🏡 If You’re considering selling:

It is probably a good time to take advantage of expected higher buyer activity and list your property with the lower interest rates.

But still be realistic with your pricing – because although demand is rising, an oversupply of listings could cap price increases in some areas, so your pricing must still remain competitive.

Also make sure your home appears at its best, to stand out in a potentially more competitive market.

🏠 If You’re a Buyer:

You should probably act sooner rather than later – if demand increases too much, properties will start selling quicker, and prices will rise.

ALSO- Get pre-approved for a home loan so you can move fast when you find the right property.

BUT also always be mindful of potential future rate changes. While lower rates are attractive, it’s best to plan your finances assuming interest rates could rise again in the future.

Final Thoughts This anticipated interest rate cut will likely boost confidence in the property market, encouraging more transactions. Both buyers and sellers should assess the opportunities and risks before making decisions, but overall, it’s a favorable time to engage in property transactions – whether you’re looking to sell for the best price or buy at more affordable financing rates

If you have any questions about FICA compliance or need assistance with your property transactions, feel free to contact us:

Please contact us if you have any questions or need guidance on selling or buying property. We specialize in making the process as smooth as possible.

We look forward to hearing from you…