Residential property sector welcomes the first rate cut for 2024
IT’S OFFICIAL: The South African Reserve Bank (SARB) has announced a 25-basis points interest rate cut following a 16-month long hold.
The residential property sector has welcomed the recent revised prime lending rate of 11.50% and repo rate of 8%, with the announcement on 19 September 2024 expected to mark the beginning of a series of upcoming interest rate cuts.
The decision, which has been widely welcomed, is seen as the first step towards market recovery.
Several positive factors have bolstered South Africa’s economic outlook, enabling the September rate cut and se-curing a projected total of 50 basis points (bps) in total before the end of the year.
The catalysts for this month’s long-awaited rate cut include the May 2024 elections, the easing of inflation, petrol price cuts, a long loadshedding hiatus, and the US Federal Reserve rate cut. These trends are unpacked as follows:
Four key factors that led to the interest rate cut
1. The GNU formation
The May 2024 elections kickstarted positive change following a few tumultuous years. The formation of the newly-established Government of National Unity (GNU) was met with a positive reaction from financial markets, reflecting optimism on the progress of the long-awaited structural reforms which are much needed.
By the end of August 2024, the rand had rallied to a 13-month high against the US dollar amidst improved investor sentiment towards South Africa and a weaker US dollar as markets began to …
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