Eva August | Chief Executive Officer | Century 21 South Africa | mail me |
South Africa’s economic environment has rarely felt straightforward. However, right now it feels particularly layered.
Global trade tensions, domestic fiscal pressures and stubborn unemployment figures have left many buyers and investors hesitant. As a result, they often wonder whether to act or wait. In my experience, hesitation is often where opportunity quietly disappears.
The reality is that property has always rewarded those who read the fundamentals rather than the headlines. Moreover, right now, the fundamentals are moving in a direction worth paying close attention to. This shift is central to maximising property returns in a shifting economy.
Interest rates – the biggest lever in the market
Since September 2024, the South African Reserve Bank has cut the repo rate six consecutive times. As a result, the prime lending rate has declined by 150 basis points to 10.25%. This is the lowest level since 2022.
For a buyer financing a R2 million home, this cycle of cuts translates into meaningfully lower monthly repayments than a year ago. Importantly, that matters far more than most people realise. Interest rates are, in practical terms, the single biggest on/off switch for property activity.
When rates fall, banks become more willing to lend. Consequently, buyers who previously sat on the sidelines begin to qualify. At the same time, sellers who felt the market had stalled began to see genuine offers. We are seeing exactly that shift right now. Home loan applications are recording year-on-year growth after a prolonged period of decline. This environment directly supports maximising property returns in a shifting economy.
Forecasts suggest that the rate cycle still has room to ease further. However, the pace will depend on global conditions and local inflation trends. With inflation sitting close to the South African Reserve Bank’s revised 3% target, the signals for continued gradual easing remain broadly positive.
Fiscal policy and property confidence
The most recent national budget provided a modest but meaningful boost to market sentiment. Specifically, Treasury pulled back on a planned R20 billion tax increase. This decision removed a key source of anxiety for households.
In addition, adjustments to income tax brackets for inflation mean consumers retain slightly more of their income each month. This improvement helps with bond affordability and supports ongoing homeownership costs such as rates, levies and maintenance.
The increase in the VAT registration threshold, from R1 million to R2.3 million, may seem peripheral to property. However, it is not. The contractors, electricians, plumbers and service providers who keep homes market-ready depend on a supportive operating environment. When smaller businesses face fewer regulatory burdens, they operate more efficiently.
Ultimately, anything that supports these businesses also supports the broader property market. This dynamic plays an indirect but important role in maximising property returns in a shifting economy.
What smart investors are doing right now
The question I hear most often is whether this is a good time to buy. My answer is that no time is ever perfect. However, some windows are better than others, and this one is worth serious consideration.
A few principles apply for anyone looking to maximise returns in a shifting economy:
- Buy within your means and leave room to absorb future rate changes. The easing cycle may continue, but global conditions remain unpredictable. Therefore, a bond that stretches you today could become a burden if external pressures shift the trajectory.
- Focus on location fundamentals, as they remain the most reliable indicator of long-term value. Strong rental demand, infrastructure investment and proximity to economic activity should anchor every purchase decision. This remains true regardless of where interest rates sit.
- Build a stronger deposit, as it opens better opportunities. Improved bond approval rates and more competitive lending terms consistently follow buyers who demonstrate savings discipline. Furthermore, government policy now encourages a stronger savings culture.
- Do not wait for the bottom, because it is only visible in hindsight. By the time conditions appear optimal, much of the opportunity has already passed. Acting strategically is therefore key to maximising returns in a shifting economy.
The bigger picture
South Africa’s property market is not without its challenges. I would not suggest otherwise. Unemployment, infrastructure strain and global economic uncertainty remain real factors. These require honest and continuous assessment.
However, property in South Africa has consistently proven itself as a long-term store of value. At present, the combination of declining rates, improved bank appetite and gradually strengthening demand signals a meaningful shift.
For those who approach the market with clear eyes, realistic expectations and a long-term view, conditions are more supportive than they have been in several years. This is not a forecast. Rather, it is an observation grounded in what we see on the ground every day.