The South African residential property market has experienced significant challenges over the past two years, primarily driven by rising interest rates aimed at curbing inflation. Standard Bank highlighted that the increase in interest rates dampened the home loan sector, resulting in a sharp decline in home loan applications and muted growth across the property market. Monthly home loan applications, which had surged to an average of R20 billion in 2021 and 2022, fell to around R14 billion per month in 2023 and remained at this lower level into 2024. This decline is linked to affordability constraints and low consumer confidence as the SARB hiked the repo rate to 8.25%, a 15-year high.

Despite the downturn, Standard Bank maintains a cautiously optimistic outlook, expecting the residential property market to recover as interest rates are projected to drop. The bank anticipates rate cuts of 25 basis points in September and November 2024, followed by further reductions in 2025, which could help rejuvenate buyer confidence and increase home loan applications. The drop in inflation from 5.1% in June to 4.6% in July supports this expectation, as it provides scope for the SARB to ease rates.

Historically, the South African residential property market has demonstrated resilience, recovering from previous downturns. The current economic environment, combined with potential political and currency stability, provides hope for a medium to long-term rebound in the housing sector.