The South African property market is experiencing an exciting shift in 2025, due to the latest South African interest rate cut on 30th January. The South African Reserve Bank (SARB) has lowered the Repo Rate by 25 base points, and this means now is the time to invest in buy-to-let property! Don’t miss out on house purchase prices being lowered by the latest interest rate cut.
IGrow’s wealth strategists are ready to help you structure your new property investment strategy and can advise you on prime locations to invest in and start the ball rolling with exclusive property viewings.
We will cover the following topics in this blog post:
- IGrow is keeping a close eye on interest rate changes in 2025
- SARB Rate meetings scheduled in 2025
- Why interest rate cuts make a difference to property investors
- Rental Agent strategies due to the property market shift and interest rate cuts
- How will IGrow prepare its investor clients for these interest rate fluctuations?
- Examples of how interest rate cuts affect novice vs seasoned investors
- IGrow is keeping a close eye on interest rate changes in 2025
We have our finger on the pulse with the latest news and predictions regarding the South African interest rate cuts, so we can keep our investors updated on appropriate investment strategies. We can also advise on the best property purchase times for your personal circumstances.
- SARB Rate meetings scheduled in 2025
The South African Reserve Bank’s (SARB’s) Monetary Policy Committee (MPC) has arranged these meeting dates for 2025:
- 30 January 2025: 25 basis point rate cut announced and implemented.
- 20 March 2025: MPC meeting (potential rate cut announcement to be made).
- 29 May 2025: MPC meetings scheduled.
- 31 July 2025: MPC meeting (another possible rate cut is predicted to be announced).
- 18 September 2025: MPC meeting scheduled.
- 20 November 2025: MPC meeting scheduled. (Source)
Economists have forecast that the SARB will implement a second interest rate cut later in the year (on 31 July 2025), reducing interest rates by a predicted additional 25-50 base points. These interest rates to be cut in South Africa are directly affected by inflation trends, economic growth, as well as the global financial situation, but the outlook remains positive for this year.
- Why interest rate cuts make a difference to property investors
The interest rate cut in South Africa has a knock-on effect on other aspects of property financial costs and obligations.
These positive effects can be seen in the following ways:
- For current property owner investors: your monthly bond repayments will be lower, offering financial relief.
- For potential property investors: homes will be cheaper than before interest rates were cut, increasing the chance to invest more easily.
- Investors who are certain they will go ahead and invest in property will experience lower financing costs. This improves their buy-to-let properties’ rental yield and their overall profits.
The South African interest rate bond cost cut has a ripple effect on the wider economy, specifically on tax and government revenue. In this case, where borrowing costs are decreasing, consumers (including property investors) spend and further investments increase. This shift can reduce taxable income due to higher interest earnings, which encourages SARS to amend tax policy.
Jonathan Kohler, Founder and CEO of Landsdowne Property Group, Cape Town, says: “The 25 basis point interest rate cut is a positive step for the property market, particularly in Johannesburg, where lower rates unlock significant value. The cumulative 75 basis point reduction, which amounts to three-quarters of a percent is a meaningful shift. Not only does this improve market sentiment, but it also enhances affordability, potentially sparking an uptick in buying activity” (Source)
Those who want to invest in property in 2025, must take into account that there will be tax deductions on rental income from potential buy-to-let properties that they purchase. Speak to an IGrow accountant if you would like expert advice on how to manage your tax when it comes to property investment income.
- Rental Agent strategies due to the property market shift and interest rate cuts
IGrow rental agents are already adjusting their strategies early on in 2025, in reaction to the shifting financial landscape that affects the world of property.
With the advent of lower interest rates:
- The demand for buy-to-let properties will likely increase, given financing will be more affordable.
- Rental rates might stabilise due to an increase in the housing supply.
- How will IGrow prepare its investor clients for these interest rate fluctuations?
The IGrow Wealth Investments team is ready to assist novice and seasoned investors navigate these interest rate cuts in South Africa with fluidity.
IGrow team’s strategies will include:
- Portfolio analysis & review: our portfolio planners will assess current investments and investigate refinancing ideas.
- Property market analysis & insights: our property investment strategists will help pinpoint the best locations for you to purchase properties, within high-growth areas.
- Creating investment plans: our portfolio planners and wealth investment strategists will tailor-make an investment strategy for your specific needs to increase your ROI.
- Guidance provided for first-time investors: our bond originators will provide solid home loan assistance to help you make a profitable property purchase.
- Tax strategy consultation: our tax consultants will make sure you are compliant with SARS regulations and at the same time optimise your deductions.
- Examples of how interest rate cuts affect novice vs seasoned investors
Example 1: Novice investor buying an apartment with help from family and friends
A first-time investor wanting to buy a R1.2 million apartment would enjoy specific perks from the interest rate cuts that have taken place. The South African interest rate bond cut cost on the 30th of January 2025 reduced the interest rate by another 25 basis points and will affect the prime lending rate positively.
In this case, let’s say the Investor plans to buy the apartment now, he will reap the rewards of a positive ROI. Let’s say he secures R1m financing by leveraging Other People’s Money (OPM):
R800,000 investment from his parents, a R200,000 investment from his/her friend who wants to invest in their project, and the remaining R200,000 as a loan from the bank.
The investor’s home loan amount is R200,000. The interest rate is now 11%. The loan term is 20 years x 12 months = 240 months. The investor’s Minimum Gross Monthly Income should be R6, 881.26 and he should have very low monthly living expenses, whilst still living at home with no rent.
If he paid a Transfer fee of R9,864.75, the Bond cost would be R10,439.75 with an Initiation fee of R6,037.50. If there were no Transfer Duty, the total would be R26,342. (Note that many IGrow properties do not have bond or transfer fees, but we are including them in our calculations here as they are in most bond calculators online).
You can use a bond repayment calculator such as the online FNB calculator (used in this example) by inputting your loan amount to work out the bond repayment fee. (Source)
The Investor’s monthly bond repayments would be R2,064.38. Add a Service Fee of R69 a month, and the total bond repayment per month is R2,133.38.
The rental income from this apartment would be approximately R9, 500/month.
The investor could therefore easily cover his bond repayment by using his rental income and have a large surplus of R7,366.32 to use on other expenses such as tenant management or property maintenance, or put towards savings to buy further properties. (Bearing in mind that many of these expenses are tax deductible on an investment property).
This is the ideal way to cover a bond repayment with a steady monthly rental income. Property investment is a real possibility for this beginner investor.
With the inflation rate cut that took place in January, this novice investor would benefit from reduced bond costs and increased monthly rental income. Hence, property investment is more attainable for novice investors in 2025!
The IGrow team’s advice:
Now is an ideal time to get into property investment as interest rates are lower now than they were last year, and set to decrease again in July. IGrow offers our buyers Rental Assist and other additional financial help (no matter what the interest rate), to make investments even more affordable.
Example 2: Seasoned IGrow investor growing their property portfolio
A seasoned investor with IGrow who owns several properties valued at R5 million and is interested in growing their portfolio would be able to benefit from refinancing current bonds and buying new property assets, as soon as possible. The usual financing rates on new property investments are dropping with January’s interest rate cut. In turn, so too, will monthly payments. This experienced investor can now refinance their current loans, reduce monthly costs by the thousand, and free up additional capital for new properties and further property portfolio growth.
The IGrow team’s advice:
We would encourage seasoned investors with IGrow to refinance high-interest loans and purchase new properties as soon as they can. Our team will help you source properties within high-demand rental areas, as you’ll encounter cheaper purchasing prices on potential investment properties, already. IGrow’s Wealth Planning and Risk advisers (Portfolio Planners) will give you valuable insights into portfolio diversification, the importance of leveraging financing, and tax benefits optimisation through companies and trusts to maximise ROI.
Conclusion
Now is the golden opportunity window to invest in property in South Africa! With the interest rates to be cut in South Africa, 2025 is set to be a prime year for property investors, both locally and internationally! You are likely to benefit from financial savings and you will reap the rewards of your prime property investments! Utilise the IGrow Wealth Investment teams’ services so you can make informed decisions and grab property investment opportunities laid out by a shifting South African property landscape.
