With August’s CPI (Consumer Price Index) easing to 3.3%, down from 3.5% in July (2025), it is unfortunate that the Monetary Policy Committee (MPC) decided to leave the repo rate unchanged at its September (2025) meeting.
All things considered, were it not for the Reserve Bank’s focus on the lower end of the 3–6% inflation target band, local conditions appeared favourable for an additional rate cut. Economic activity remains subdued, the rand has been supported by a weaker dollar, while oil prices will hopefully stay contained.
Even though Q2 2025 GDP (Gross Domestic Product) surprised on the upside, the subsequent upward revision to GDP growth estimates for the year to around 1%, still lags the population growth rate of 1.3% – highlighting that the economy remains constrained in a cycle of sluggish growth.
Given these factors, we are hopeful that the latest decision represents only a temporary pause in South Africa’s interest rate easing cycle, with the prospect of further cuts either later in 2025 or during 2026.
Housing market recovery
Despite the pause in the local interest rate cycle, the recovery in the housing market continues to gather momentum, albeit modestly. National sales activity is showing slow but steady improvement, supported by the banking sector, which is offering attractively priced loans, elevated approval rates and reduced deposit requirements for home buyers.
Benefits for home buyers
While lower interest rates would certainly provide additional momentum, the housing market is already benefiting from subdued inflation, a series of petrol price cuts, and some interest rate relief, all of which help ease household debt burdens. This is encouraging the return of first-time buyers, in particular, to the housing market.
Positively, according to ooba Home Loans, the average national concession relative to prime during the year to August 2025 was -0.63%, compared with -0.55% in the same period last year, resulting in more attractive finance options for potential buyers. Although home loan pricing varies widely across regional markets, for the year to date it has improved to various degrees in all regions compared with 2024.
Furthermore, the average national deposit paid as a percentage of purchase price declined to 14.7% between January and August 2025, down from 15.4% a year earlier (source: ooba Home Loans). Deposit levels for both overall purchasers and first-time buyers are now close to those seen just prior to the pandemic, having steadily reduced from the post-pandemic highs of late 2023 and early 2024.
Currently, the recovery in house prices is more pronounced than the rebound in sales activity, which reflects an imbalance between demand and supply, particularly in the Western Cape, which has continued to attract strong buyer interest from across the country and externally since the pandemic.
From a Pam Golding Properties perspective, we are experiencing sustained activity across all regions of the country and in all price bands, including the luxury market, reflecting a steady recovery in buyer confidence. In particular, high-demand areas and sought-after locations continue to enjoy buoyant levels of activity, driven by lifestyle appeal, ongoing semigration trends, and the availability of competitively priced finance. This momentum underscores the resilience of the market, even in the face of a subdued economy.
All comments above by Dr Andrew Golding, chief executive of the Pam Golding Property group
