South Africa's property sector is urging the Reserve Bank to keep interest rates unchanged as it prepares for its upcoming policy meeting, warning that a premature hike could put further pressure on an already fragile economy.
While industry leaders argue that recent oil price volatility due to the conflict in the Middle East is temporary and should not dictate monetary policy, steady inflation and slow growth support a more cautious approach to interest rate adjustments at this stage.
The underlying fundamentals remain strong keeping the rate unchanged. The rand remains fairly stable below R17 to the USD. Inflation is contained within the Bank's new target range, and has actually eased to 3.0% for February (from 3.5% in January and 3.6% in December), clearly suggesting that there is no fundamental reason for a rate increase and increase in borrowing costs at this level.
Indeed, Seef believes the bank actually missed a golden opportunity to cut rates in January, given the favorable inflation data and the strong rand. Instead of providing a significant boost to the economy and property markets, we now have a situation where interest rates could be at risk due to a temporary disruption in oil prices.
economic pace slowed down
In general, Seeff says the bank erred on the side of caution by not cutting rates faster. As a result, the low rate has had no notable impact on economic growth or asset sales. GDP growth for the final quarter of 2025 was a disappointing 0.4%, and ended the year at only 1.1%, below the Bank's own projection of 1.3%.
This lack of momentum is reflected in the property market, where performance remains well below expectations. He points out that the large reported increase in property prices, particularly in the Cape, has masked the reality of weak performance in most regions, with overall sales volumes still down by about 19% compared to 2021/22.
Oba Home Loans' mortgage-application data also reflects this trend. While there has been a slight improvement in the value of applications since late last year, the actual number of applications remains well below the previous high (2021/22 volume).
Seiff says that although confidence has started to return as the economic outlook improves, neither the economy nor the property market have felt any real boost from the interest rate cuts because they were too slow and too short.
Economic stability is critical now, and markets should not be destabilized by rate hikes that add to the existing pressure on consumers and the economy. South Africans are already facing significant increases in electricity and fuel costs.
Banks should not add higher debt-service costs to these burdens, especially because consumers are not spending as much. To ensure long-term stability and job growth, the Reserve Bank should keep rates stable and maintain a positive outlook for future rate cuts.
Samuel Sieff, Sieff Property Group, South African property market, mortgage application trends, economic growth 2025, interest rate impact
About Samuel Sieff
Samuel Seiff is the Chairman of Seiff Property Group.
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