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How have the interest rates affected the property industry in South Africa?

  • Latest News
  • May 5, 2023
How have the interest rates affected the property industry in South Africa?

Interest rates are defined as the amount, usually represented as a percentage of the amount borrowed, that a lender charges a borrower for the lending of an asset. Property prices are directed by interest rates in various ways. Finance costs and mortgage rates are two elements primarily affected by interest rates. These changes in capital flow can have a direct effect on a property’s supply and demand dynamics.

The interest rates in South Africa are expected to increase throughout 2023 according to the South African Reserve Bank (SARB). As of November 2022, the prime lending rate in South Africa increased from 9.75% to 10.5% which is 0.5% higher than what it was prior to the first lockdown in South Africa. With the prime lending rate dropping to 8.75% as of 20 March 2020, clients were more willing to sell, buy and invest. During this period, the buyer and seller market was booming. The properties sold at the start of 2022 almost complemented the number of transactions recorded during the first half of 2020 and is comfortably higher than during the first half of 2019 prior to the pandemic.

Recently, it has been notable that residential property is being sought after by South Africans, particularly the youth of today. Specifically, the demand for investment units (buy-to-let or Airbnb) continues to rise. Due to the increase in interest rates, property prices escalated.


In March 2023, the interest rate was further adjusted up to 11.25%. The rise of interest rates can be viewed in a positive and negative light. It depends on how you choose to view it.


The positive aspects include:

  • For a buyer, a property serves as a long- term investment with the overall value continuously growing.
  • As a real estate agent, it’s easier to acquire stock as sellers become more motivated to sell because their bond repayments have increased.

The negative aspects include:

  • Homeowners needing to sell, due to bond costs becoming less affordable and the same goes for buyers wanting to purchase. For a real estate agent, clients are more cautious about purchasing property.

In conclusion, interest rates play an extensive role in the real estate world. It is crucial for estate agents to be aware of the fluctuation of rates and plan their business approach accordingly. Speak to a Property.CoZa Property Professional in your area to find out more.

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