Current interest rate is the new normal in suburbia, says Tyson Properties

For Tyson Properties CEO, Chris Tyson, today's decision by the Reserve Bank's Monetary Policy Committee (MPC) to drop the repo rate by 0.25 basis points from 7.5% will be a welcome reprieve for both property owners and investors.  

Although a series of interest rate cuts were predicted for the first half of 2025, this hit a pause when the central bank left rates steady in March. The continued global uncertainty that followed US President Donald Trump's so-called tariff tsunami together with local upheavals surrounding the 2025 government budget and elevated unemployment called for restraint.

Tyson points out that, although there were indicators that suggested that the Reserve Bank could either drop or even increase interest rates, it had decided to give South Africans some cause for optimism.  This latest interest rate drop is also likely to counter the depressed economic growth forecast announced in the Finance Minister's third budget last week.

Tyson Properties director, Francois du Toit, says that although inflation remain below the mid-point of the target range at present, the fuel levy hike announced in the budget last week will  filter into all essential goods and household expenses and could once again push up inflation. He expects ongoing economic headwinds which are likely to reign in interest rate cuts for the time being. 

Tyson adds: "Our inflation rate is quite low at the moment. I think, given the ongoing uncertainties in the market, the Reserve Bank will wait at least another six months just to see where things are going." 

At best, Tyson foresees the possibility of a 0.25% or 0.5% decrease towards the end of this year.  

"I think that the current interest rate scenario is where our new norm is going to lie. It might go down a little bit, it might go up a little bit, but I think that people must budget according to where interest rates are right now. This is the level with which we are going to have to work. If it drops a little, then this will be a bonus. If it goes up  bit, they will have been prepared," he advises.

Although Tyson says South Africa is unfortunate not to have a stable interest rate environment - a scenario that is likely to continue for at least  the next five years, Tyson believes that the property market remains resilient: "We spent the last couple of years straight after COVID seeing record lows and little mini property boom. When those rates began to increase, people found that they could no longer afford the houses they had bought. We struggled to sell houses because expectations were too high. Interest rates began to level off and the market picked up again. Then along came Trump and markets became nervous again. Now I tell our agents and our principals to take a different view and to see the market in which we are working as a good one already. We can work with what we have and run our businesses according to the hand that we have been dealt. We cannot sit and wait for interest rates to come down for the market to improve."