Unchanged repo rate disappointing news for home buyers, says Dr Andrew Golding, chief executive of the Pam Golding Property group

“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 aspirant 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 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.

Meanwhile, a large petrol price cut is anticipated in April, currently estimated at around 80-90c per litre, which could further help to dampen inflation.

That said, the economic outlook is currently uncertain, with erratic trade tariff policies in the US causing a deterioration in global growth expectations and a worsening in the inflation outlook. Across the ocean, US consumer inflation expectations have surged to the highest level in 30 years as a result of the tariff turmoil.

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.

Notably, growth in house prices has accelerated across all three major regions. The recovery in Western Cape house price inflation continued to gather momentum in February 2025, rising to +6.04% from a lower turning point of +4.7% in March 2024, while both Gauteng and KwaZulu-Natal continued to rebound strongly last month (February 2025), rising to +4.5% and +3.11% respectively. (Source: Pam Golding Residential Property Index)

According to a significant data revision by Lightstone, sectional title house prices have also experienced a rebound, with growth rising to +2.4% in February 2025, with freehold house price inflation easing to 3.4% in the same period.

The gradual recovery in first-time buyer demand has continued in early 2025, with the percentage of applications received from Ooba Home Loans rising to 46.6% in February as the 25bps rate cut at the January 2025 MPC meeting boosted demand. The recent National Budget announcement that the threshold for exemption from paying transfer duty rises from R1.1 million to R1.21 million is a further incentive for first-time buyers.”

All comments above by Dr Andrew Golding, chief executive of the Pam Golding Property group

Posted by The Know - Pam Golding Properties