Repo rate
The South African Reserve Bank (SARB) decided to maintain the repo rate at the current level of 7.5% (prime rate at 11%).
The repo rate (repurchase rate) is the interest rate that SARB lends money to financial institutions in South Africa. A change in the rate signifies the bank's strategy to stimulate or slow the economy. A reduction in the rate will provide relief for consumers and boost the economy making property transaction more affordable.
Stable market conditions
SARB has set the inflation range between 3% to 6% and the South African economy has managed to remain close to this range for a number of years with annual reductions. This should signify stability in the market with an opportunity to reduce the repo rate and drive confidence into the market, which would stimulate both domestic and foreign investment.
- 2022: 6.9%
- 2023: 6.0%
- 2024: 4.4%
Economic outlook
Although inflation has been positive over the last few years there are a number of local challenges, which can interpret why SARB has kept the rate unchanged. Locally, high unemployment, return to load shedding and certain sectors still experiencing headwinds has lead to a conservative approach to the outlook on growth.
Globally there are many regions with geo political risks of instability and trade disruptions with high interest rate in some major bank like the US Federal Reserve and European Central Bank further accounting for a conservative approach.
Missed opportunity
The South African property market has been stable over the last few years since the major losses after the pandemic with prices starting to rise faster in the last 12 months. This lends itself for buyers to enter into the market while tenants should take advantage of relocation or early renewals.