The South African Reserve Bank’s decision to keep the prime lending rate at 10.25% was widely anticipated by many economists. With inflation at 3.6% and the rand showing incredible strength of late particularly against the US dollar, Wakefields believes and hoped for a modest rate cut that could have eased pressure on bondholders and given the property market a further boost. Instead, the Bank opted for caution, maintaining higher rates to anchor inflation, especially their new 3% target (which we are very much in favour of) and manage risks associated with South Africa’s position as a higher-risk investment destination.
As much as we – and bondholders across the country – were no doubt hoping for a 25bps rate cut, the Reserve Bank is notoriously cautious. In the broader context of setting interest rates in Africa’s largest economy, caution and credibility are ultimately preferable to the alternative.
The pause in cutting rates today, means that there is a very good chance that another cut will come in the next Monetary Policy meeting set for the end of March. It has been encouraging to see our Rand appreciate this year so far; the possibility of further petrol cuts in February; the prospects of better economic growth in our country; and the reduction in yield on our government debt. All of these bode well for the year ahead.
For bondholders, the message is clear: stay disciplined and keep repayments on track. Every Rand paid down today shortens the path to full ownership tomorrow. For buyers on the sidelines, affordability has already improved compared to a year ago but waiting for the “perfect” rate cut could mean missing out on the right home in the right location. We are seeing increasing sales volumes from the lows of Q4 in 2024 , meaning less properties for sale in some areas of KZN. House price inflation has picked up in eThekwini and KZN as a whole steadily over the last 12 months up to around the 3.5 % per annum level.
At Wakefields Real Estate, we remain confident that 2026 is looking brighter for property than any year since 2021. Today’s rate decision should be seen in context. We are still in a rate-cutting cycle, and there is every possibility that the cost of owning property for many, especially in terms of bond repayments, will reduce as the year progresses.
In the meantime, for buyers, sellers, and investors, planning, preparation, and informed decisions are key. The market is ready…are you?
