A real estate agent places a for sale sign in front of a house Picture: Pexels Thirdman
Estate agencies and economists are predicting a positive outlook for South Africa’s property market in 2025, driven by interest rate cuts and increased buyer demand.
Adrian Goslett, regional director and CEO of RE/MAX Southern Africa, said slow but steady reductions are expected in the repo rate throughout 2025, roughly 1.25% down between now and December 2025.
“This will lead to an increased buyer pool from both first-time buyers as well as investors. It should also create some breathing room for existing homeowners with home loans,” he said.
In the Western Cape, the province will continue to provide safe and steady returns, Goslett said, albeit at a premium entry price.
“There is value to be had in Gauteng and KZN over the next six months. Once interest rates come down and buyer demand goes up, the opportunity for value-priced home purchases may continue to exist for a while, but the availability of value-priced homes will become significantly reduced as sellers expect higher offers as the demand increases,” he said.
He also said that South Africa was a “steal” for foreigners.
“SA is and will remain a great investment option for foreigners … to live in Europe and the US earning euros and dollars and escape seasonally to enjoy that hard-earned money in a country that offers luxury at bargain prices,” said Goslett.
Andrew Golding, chief executive of the Pam Golding Property Group, said with inflation currently well below the lower end of the 3–6% target range at 2.85% in October 2024, and electricity supply seemingly under control, the economic outlook for 2025 appeared increasingly positive, with a further 25 basis points (bps) repo rate cut most likely on the cards for January 2025.
Golding said although the Reserve Bank remained cautious in the light of upside risks to the inflation outlook, it was expected to reduce interest rates by a further 75bps in total next year, influenced by international developments like the oil price, rand, and US trade tariffs, among others.
He said the sentiment in general has improved, which, together with the two recent repo rate cuts of a cumulative 50bps in 2024 had already created a ripple effect across the residential property market, increasing uptake particularly in the lower to middle sectors of the market while also boosting confidence in the luxury market.
“This is borne out by the fact that November 2024 has proven a busy month, with our group sales 19% ahead of transactions successfully concluded in November 2023.”
Golding added that the banks continued to support the market with competitively priced loans, lower deposits, and elevated approval rates, while investors and homeowners will be buoyed by the fact that according to the Pam Golding Residential Property Index, house price inflation (HPI) in October 2024 of 5.0%, compared to consumer price inflation of 2.8%, translates into real growth in HPI of +2.2%.
“This means we have seen two consecutive months in which national HPI has exceeded the national consumer price inflation rate, as in September 2024 HPI was 4.7% vs CPI of 3.8%, thereby reflecting real growth in HPI of +0.9%,” he said.
He said this bodes well for continued demand for residential property among investment buyers.
“Fuelled by ongoing demand for homes among young, first-time buyers as well as those relocating for a host of lifestyle and other reasons, coupled with lower interest rates and increased market confidence, there remain sound opportunities offering value-for-money property acquisitions in regions and areas around the country,” said Golding.
Regional sales manager of the Rawson Property Group, David Jacobs, said while the residential property market in 2024 experienced record-breaking activity alongside moments of uncertainty, the group was optimistic about the opportunities ahead for 2025.
He said the property market will be more stabilised and brimming with potential for buyers, tenants, investors, and developers.
“Stabilising interest rates and inflation could unlock a pent-up wave of buyer activity with positive results for property price growth in the mid- to long term. Sellers with properties priced correctly in 2025 market conditions will continue to conclude successful transactions in completely reasonable time frames,” he said.
Jacobs said the Western Cape will continue to be strong and will mostly see a resurgence in foreign investment.
He said the property market is looking optimistic in both Gauteng and KwaZulu-Natal, with people largely moving to Gauteng for its affordability.
In KZN, he said better governance is making headway in improving infrastructure and working on addressing service delivery issues.
“Coastal areas such as Ballito and Umdloti are known for their exceptional infrastructure and amenities, making them highly desirable places to live for South Africans and foreign investors,” said Jacobs.
Waldo Krugell, an economics professor at North-West University, said a lower inflation rate, lower fuel price, and two 25bps repo rate cuts have created some breathing room in household budgets.
“With probably two to three more 25-basis point rate cuts in 2025, first-time buyers will be happy to leave behind expensive rental homes and get into the market,” he said.
Johann Els, the group chief economist at Old Mutual, said he expected more rate cuts early next year, probably two or three 25-basis point rate cuts.
“The combination of a better economic outlook built on better confidence, lower inflation, and lower interest rates, that’s a combination that would be positive for the property market,” he said.
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