Sarb maintains current rates as housing market shows signs of bounce-back
Reacting to the South African Reserve Bank’s decision to hold interest rates steady on Thursday, 18 September 2025, ooba Group chief executive officer Rhys Dyer described the move as disappointing, noting that inflation remains well within the target range while South African consumers continue to face significant financial pressure.
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This follows a quick succession of interest-rate cuts from September 2024 to July 2025, with several local and global economic developments driving the decision.
“Today’s announcement should be viewed as a pause or recalibration rather than the end of the rate-cutting cycle. It gives the Sarb time to balance domestic inflation risks with an increasingly supportive global backdrop," Dyer says.
Locally, Dyer shares that the Sarb remains committed to its recently signalled shift toward targeting the lower end of the 3-6% inflation band.
“Anchoring expectations near 3% will be essential as headline inflation rises, driven by higher food costs and base effects, which outweigh modest petrol-price cuts (only 4c per litre in September),” he says.
Key statistics on recovery
Despite the rate hold, Dyer shares that ooba Home Loans data points to signs of steady recovery following five interest rate cuts. He highlights some of the key developments as follows:
Improved affordability aids higher purchase prices: From January–August 2025, the average overall purchase price recorded by ooba Home Loans came in at R1.68m, marking a 3.4% increase year-on-year. Over the same period, the average purchase price paid by first-time homebuyers increased by 4.4% to R1.24m. “These statistics underpin improved affordability and financial wellbeing among consumers.”
Dyer also notes that while the Free State may be home to the lowest purchase price in the country (at R1.16m Jan–Aug 2025), it is in fact the only region registering double-digit growth in the average purchase-price paid, at 10.7% (Jan-Aug 2025).
Gauteng turns a corner: While there has been an uptick in activity across all major provinces, the uplift in Gauteng is most notable.
“It’s a known fact that the recovery of the national housing market has been driven by the Western Cape at a regional level and by Cape Town at a metro level, but the metro housing markets in Gauteng have also gathered momentum and are now major contributors to the national housing market recovery,” says Dyer, adding that this is particularly evident in the prices paid by first-time homebuyers.
“The recovery in first-time homebuyer house price inflation (HPI) in Tshwane became more pronounced this year, with the average purchase-price rising by 11.2% from Jan–Aug 2025. In Johannesburg, we have also noted signs of recovery in recent months, with purchase prices up by 11.7% in Aug 2025 from year-earlier levels.”
First-time buyer demand rises: As a known interest-rate sensitive demographic, the industry has long awaited a rebound in first-time homebuyer demand, which, according to Dyer has become more consistent in 2025. “August 2025’s figures showed that 47.7% of total applicants were first-time homebuyers, close to recent highs, with underlying signs of recovery still intact.”
In addition, he points to accelerated lending support from the country’s major banks. “Interestingly, in Q2 ’25, our data shows that 59% of first-time homebuyers were able to purchase a home without a deposit (100% home loan) and 10.5% secured financing that also covered their transfer- and bond-registration costs.”
Despite the support, it is also encouraging to see the average first-time homebuyer deposit sitting just above the recommended 10% mark, at 10.4% in Q2 2025 – a particularly commendable feat in a tough economic climate.
Cape Town resilient in driving activity: According to Lightstone, Cape Town continued to outperform other major metro housing markets by a wide margin, with purchase prices rising by 7.4% in July 2025. This was followed by eThekwini (3.3%) and Tshwane (3.0%).
In addition, the banks continue to back homebuyers in this province, offering a generous interest-rate discount of prime less 0.87% in Aug 2025, compared to 0.64% nationally, further fuelling activity.
Savvy buyers put down big deposits: Looking to the average deposits across the regions, Dyer points to a robust national figure of 14.7% for H1 2025. “As the average purchase-price rises, so too do deposits - an encouraging sign that homebuyers are building stronger equity positions from the outset.”
Regionally, the Western Cape leads with an average deposit of 20.3% followed by the Eastern Cape at 15.4%, KwaZulu-Natal at 14.3%, Limpopo at 14.1% and Johannesburg at 13.4%.
Looking ahead, Dyer expects further rate-cut relief in November 2025 or early next year. He emphasises that the stability of these cuts plays a crucial role in fostering a favourable borrowing environment for both homebuyers and homeowners. “This not only supports confident investment but also helps to sustain the upward trajectory that we are currently on.”