The South African residential property market, previously hindered by elevated interest rates and reduced lending from major banks, is poised for a significant boost as interest rates are expected to decrease. Standard Bank Home Services head Toni Anderson highlighted that the market had faced challenges due to a rate-hiking cycle by the South African Reserve Bank (SARB) since November 2021, which brought the repo rate to 8.25% and the prime lending rate to 11.75%. This surge in rates led to a cautious sentiment among homebuyers and subdued growth in the real estate market.

However, with many experts predicting that the SARB will start cutting rates—potentially as soon as September 2024—banks are preparing to increase their lending, anticipating higher demand for residential properties. Bloomberg reported that South Africa’s real interest rate is at its highest in 18 years, suggesting the possibility of a 50 basis point cut this year, easing the financial strain on households and boosting consumer confidence.

Standard Bank and Capitec have already noticed an uptick in demand for home loans and credit as inflation moderates and interest rate cuts loom. Standard Bank CEO Sim Tshabalala noted that the bank has maintained its lending criteria throughout the challenging period, and with the economy showing signs of recovery, it expects lending to grow in the latter half of the year.

Anderson remains optimistic about the long-term prospects of the property market, citing historical resilience and recent political stability as factors that could further support a market rebound.