A month ago, the South African Reserve Bank’s Monetary Policy Committee (MPC) delivered a widely anticipated but still significant decision: a 25 basis-point interest rate cut. Analysts had been split in the lead-up to the announcement, with some expecting a hold and others forecasting a cut. The optimists were right, and we at Just Property welcomed this move.
The reduction in the repo rate offered timely relief for homeowners and may serve as a catalyst for first-time buyers who have been sidelined by high borrowing costs. It’s a small shift with big implications.
A Boost for Buyers, Sellers and the Broader Economy
On 18 June 2025, Stats SA announced that consumer price inflation for May remained unchanged at 2,8% from April. The rate cut, coupled with lower-than-expected inflation numbers, is expected to inject fresh momentum into the local property market. For current homeowners, it will translate into reduced monthly bond repayments, providing immediate financial relief. For prospective buyers, especially those entering the market for the first time or considering an investment property, it improves affordability, potentially allowing them to move forward with plans that were previously just out of reach.
We anticipate increased interest from our clients. Whether they’re considering upgrading, refinancing, or purchasing their first home, the rate cut opens new opportunities. Beyond the property sector, the decision should also help stimulate broader economic activity, especially in consumer-sensitive industries like retail. Of course, the MPC will remain cautious and vigilant about inflationary risks, but this move signals confidence in the current economic trajectory.
What This Means for the Market and What to Watch For
A quarter-point reduction may seem modest, but its psychological and practical effects on buyer and seller sentiment shouldn’t be underestimated. We may see a short burst of competition for well-priced stock as buyers seek to capitalise on the lower rate before prices potentially adjust upward in response to renewed demand.
For property professionals, this is a moment to act. Be ready with updated bond affordability scenarios and ensure clients understand the impact of this decision on financing and long-term affordability. Pre-approval windows can be short in a moving rate environment, so urgency and clarity are key.
We recommend that clients:
• Reassess their financial positions and explore pre-approval options quickly
• Act sooner rather than later, while remaining prudent by stress-testing their budgets one percentage point above the current rate
And for professionals in our industry:
• Use this window to proactively engage clients and highlight new opportunities
• Focus on educating buyers, particularly first-timers, about affordability, bond costs and financial resilience
• Prepare for increased demand by aligning marketing and financial models with revised affordability levels
Looking Ahead: Cautious Optimism with Key Risks in Play
As we looked toward the next MPC meeting, our outlook was cautiously optimistic. Inflation had moderated, underscoring the potential for further rate easing. If global oil prices remain contained and the rand stays relatively stable, another 25 basis-point reduction is still plausible.
However, economic growth remains tepid. GDP grew just 0,1% and unemployment rose to 32,9% for the first quarter, with youth out-of-work rates at 46,1%. In addition, logistical constraints and global trade tensions are weighing heavily on business sentiment, a nuance visible in the drop in business confidence to 40. Geopolitical risks are also mounting. Iran’s recent threat to close the Strait of Hormuz – a critical channel for 20% of the world’s oil supply – could disrupt global markets. If the blockade proceeds, it will impact oil prices, potentially driving inflation higher and prompting rate hikes and a weaker rand, although such impacts are likely to be temporary.
This would imply a longer plateau for borrowing costs, reinforcing the need for flexibility and preparation.
Industry stakeholders must prepare for both possibilities. Monitor the MPC’s tone and inflation guidance closely. Update financial models, adjust marketing strategies accordingly, and stay agile. The ability to pivot quickly in response to economic shifts will be a key competitive advantage in the months ahead.
Final Thoughts
The fundamentals of property remain unchanged: location, affordability, and long-term value continue to underpin sound investment decisions. What has changed, for now, is the economic backdrop.
We are ready to help our clients navigate this changing landscape, unlock new opportunities, and make informed, confident decisions.