US President Donald Trump’s economic policies, particularly the trade tariffs, are easier for the local property sector to absorb in a rate-cutting environment.
This was as the president of the world’s largest economy announced that South African products exported to the US will be hit by a 30% tariff from August 7.
It is important to remember that the economy operates through upward, downward, and lateral linkages, all of which are influenced by external shocks, says Dr Farai Nyika, an academic programme leader at the Management College of Southern Africa (MANCOSA).
He said that many businesses affected by tariffs may experience cash flow pressure, but the lower interest rates could ease the burden of servicing property loans.
“This also extends to the rental market. As some workers face reduced hours or even job losses in tariff-impacted industries, lower interest rates may help soften the blow. In such cases, landlords may indirectly benefit from fewer income disruptions among tenants, reducing the likelihood of costly rental defaults,” Nyika said.
The Reserve Bank’s decision to reduce the repo rate by 25 basis points to 7.00% is a positive move in the current climate, says Dr Omolola Arise, also an academic programme leader at the Management College of Southern Africa (MANCOSA).
“With inflation now well within target and domestic demand still subdued, the cut provides some much-needed relief to consumers, homeowners, and businesses. It’s a cautious but thoughtful adjustment that reflects the SARB’s ongoing commitment to balancing price stability with growth.
“Given ongoing global uncertainties, including the threat of new tariffs, this decision keeps the door open for future flexibility, should the economic outlook deteriorate,” Arise said.
Nyika said that although interest rates remain higher than they were during the peak of the recent pandemic, the current downward trend is encouraging. He said the latest cut should help restore confidence in the property market amid severe economic turbulence.
Arise said a slightly more decisive move, such as a 50-basis point reduction, could have delivered a stronger boost, particularly for South Africa’s struggling property sector. The academic said a deeper cut would have more significantly lowered borrowing costs for both existing and prospective homeowners, improved affordability and access to credit, and stimulated developer activity and new investment.
“It would also have sent a clearer signal of support at a time when global economic uncertainty continues to weigh on sentiment,” Arise said.
In addition, Arise said forward guidance from the Reserve Bank would have been especially valuable, offering much-needed clarity on the interest rate outlook. “This kind of certainty is crucial for building investor and consumer confidence in sectors like property, where long-term planning and stable conditions are key to growth.”
Today’s decision by the SARB to cut the repo rate by 25bps reflects a measured approach to the delicate balancing act the MPC is currently navigating, says Justin Davidson, a stockbroker at Anchor.
He said with June’s inflation print of 3.0% YoY at the bottom end of the SARB’s 3% to 6% target range, the decision aligned with easing price pressures, even amid geopolitical and policy uncertainties.
“The local property sector remains resilient, underpinned by strong operational performance and credible distribution growth guidance. The 25bps rate cut offers welcome funding relief and may ease balance sheet pressure for more highly geared REITs. The move supports stability and is positive for both sentiment and long-term sector positioning,” Davidson said.
The stockbroker said the 25bps cut was both ideal and welcome. “With inflation well anchored, the decision signals easing funding pressures and a boost to investor sentiment. For the property sector, it further supports valuations, reduces debt costs, and potentially unlocks additional growth opportunities.”
Davidson added that it is encouraging to see renewed signs of equity issuance in the listed property sector, a signal that capital markets are beginning to re-engage.
“With reduced rates and improving operational fundamentals, the environment is becoming increasingly conducive to selective capital raising and long-term positioning, ” Davidson said.
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