INVESTOR INTELLIGENCE
GDP and Unemployment : Key Drivers of Market Behaviour GDP growth directly affects consumer spending power , employment rates , and the overall housing demand . For instance , a higher GDP often correlates with increased disposable income , enabling more people to afford home ownership or rental properties .
However , South Africa ’ s high unemployment rate according to Statistics South Africa , currently hovering around 32.6 %, continues to suppress some demand in the middle-income housing sector .
Inflation and Interest Rates : Key Drivers of Market Behaviour Inflation , forecasted to stabilize at 4.5 % in 2025 , is a critical factor for investors to monitor . This is also according the International Monetary Fund ( IMF ). Historically , inflation erodes purchasing power , but when kept within a manageable range , it can stimulate economic activity by encouraging spending . The South African Reserve Bank ’ s monetary policy has successfully anchored inflation expectations , paving the way for potential interest rate reductions .
Currently , the prime lending rate in South Africa stands at 11.50 %. High interest rates have dampened property price growth over the past two years . However , the expected rate cuts in 2025 could rejuvenate the market , making home loans more affordable . Lower rates will also reduce the financial burden on landlords with mortgages , improving overall profitability in the rental sector .
Property Price Growth
According to Lightstone ’ s Residential Property Index ( end of November 2024 ), property price ’ s current annual capital growth is 3.3 %, with the Western Cape performing the best and Northern Cape in second place .
National propery inflation Current annual property inflation rate is 3.32 % and monthly is 0.29 %
30 REI MAGAZINE JANUARY 2025