Samuel Seeff, chairman of the Seeff Property Group, has called on the South African Reserve Bank to implement another interest rate cut ahead of this week’s Monetary Policy Committee meeting.
While the 25-basis point reduction in July offered some relief, Seeff says it was insufficient to meaningfully stimulate the economy or the property market.
“Although the rate cuts this year have provided some relief, we are still not seeing the level of economic momentum needed to drive growth and create the jobs so desperately needed,” he said.
Economic and property trends support further rate cut
Seeff highlighted that the gap between interest rates and inflation remains too wide. South Africa’s GDP grew by a mere 0.8% in the second quarter – a slight improvement over the previous quarter, but still far below the level required to reduce unemployment or spur significant economic activity.
In the property sector, overall sales volumes for the first eight months of the year remain broadly below the same period in 2024, while national house price growth is only marginally above inflation, yielding minimal capital gains for homeowners.
The current interest rate is approximately 75 basis points above the pre-pandemic level of January 2020, when inflation stood at 4.5%. Seeff noted that the historic low rates during 2020-2021 coincided with stronger economic growth.
Seeff argued that key indicators now support a further rate reduction. Inflation, currently at 3.5%, remains at the lower end of the Reserve Bank’s target range, while the Rand has stayed relatively stable, removing one of the main reasons for maintaining a high-interest rate environment.
He added that another 25-basis point cut would provide tangible relief to households, increase disposable income, support bond repayments, and boost confidence in the property market and broader economy. “We are at a critical juncture,” Seeff said. “It is time for the Reserve Bank to take decisive and bold action.”
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