The danger of a significantly weaker rand is that it leads to unchanged, or even worse, higher interest rates that will hurt homeowners.
Professor Waldo Krugell, an economist from the North West University’s (NWU) Faculty of Economic and Management Sciences, told this publication that the volatility of the exchange rate is an outcome of all the policy uncertainties around international trade, as well as the government of national unity(GNU).
“There is little to do about these international factors. The best outcome would be unchanged rates this year. The best South African policymakers and businesses can do is to try and do the basics right here and make the economy, the exchange rate, and interest rates more resilient to the shocks and less volatile.
“That means pushing reforms, delivering value for money public services, trying to be as productive and competitive as possible,” Krugell said.
On Wednesday morning, Reezwana Sumad, a research analyst at Nedbank CIB, said that on Tuesday, the local session got underway with the USDZAR trading at 18,6750.
She said although the markets remained somewhat cautious, the local unit posted incremental gains throughout the session to reach 18,5900 by the time of the close.
“This morning, the USDZAR is currently trading at 18,5825. The major currency pairs, however, lost ground on the day, relinquishing some of their previous gains. The EURUSD traded from an opening level yesterday at around 1,1530 to reach the current level of 1,1380. The GBPUSD is currently trading at 1,3295, having opened at 1,3400 yesterday.
“Possible trading range for the USDZAR today is 18,4500 to 18,8500. The previous comments regarding the Federal Reserve (Fed) leadership, which caused significant uncertainty in the financial markets, appear to have been, to a greater extent, withdrawn.
“These scenarios have made for particularly trying trading conditions when combined with the various global risk factors,” Sumad said.
PSG Insure said that with times being tough, and geopolitical tensions are high in markets across the globe, South Africa is not immune. The company said continued pressure on and depreciation of the rand, largely due to factors outside of SA’s control-fuel fears, add financial strain to a struggling economy, which already needs to deal with successive VAT increases over the next two years.
According to Ryno de Kock, head of distribution at PSG Insure, South Africa imports the majority of its consumer goods. These imports include items such as cars, electronic devices, and household appliances.
“A weaker rand means that all these items cost more, which in turn means that their replacement values increase. Insurance companies are likely to experience higher claim values as the rand depreciates and may, in time, have to increase insurance premiums to cover these,” De Kock said.
Bradd Bendall, BetterBond’s National head of sales, recently said amid mounting global uncertainty after the US announced tariff import increases, there is some assurance in knowing that the South African property market is showing signs of acceleration.
“Home loan values are at their highest levels ever-at an average for all buyers of R1.28 million, and 11.5% higher than three years ago before interest rates were hiked,” Bendall said.
BetterBond said even though the prime lending rate remained unchanged after the Reserve Bank’s March meeting, the market seems poised to accelerate throughout the year.
“As reported in BetterBond’s latest Property Brief (April 2025), the marginal improvement in homebuying activity that was evident at the start of the year gained traction in March, with a 9.3% year-on-year increase in home loan applications.”
BetterBond said it also recorded a new record high for the value of the average home loan awarded to first-time buyers-R1.11 million, during the first quarter of the year, says Bendall.
The number of home loans granted to these buyers also increased by 33% for the 12 months up to March 2025. First-time buyers in Johannesburg’s South-Eastern suburbs and the Western Cape accounted for the bulk of these loans, with 20% and 18% respectively.
Bendall said urbanisation is a significant driver of first-time buyer activity, with regions with larger metropolitan municipalities accounting for 77% of the loans granted to first-time buyers.
Bendall said that although there has not been a “meaningful” return to positive growth in average home prices, there are some points of positivity that bode well for the strengthening of the market.
He said for all buyers, the year-on-year increase was only 0.5%, but this is still up from the marginal decline seen in January and February.
“Viewed from a five-year perspective, it is clear that an investment in a residential property still holds the promise of a store of value, although the age-old maxim of location first should be kept in mind.”
Krugell said that higher for longer interest rates are tough on household budgets and they dampen property development simply due to unaffordability of credit. He said that that it turn, puts the construction sector and the jobs they supply under pressure.
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