Calls Grow for Bold 50bps Rate Cut by SARB as Property Market Struggles and Job Losses Mount

The pressure is mounting on the South African Reserve Bank (SARB) to take decisive action as the economy struggles under the weight of job losses, weak growth, and a sluggish property market.

Samuel Seeff, chairman of the Seeff Property Group, has issued an urgent call for a minimum 50 basis points (bps) interest rate cut, urging SARB’s Monetary Policy Committee to act decisively at its upcoming meeting.

“South Africa can no longer afford to wait. The time for a bold interest rate cut is now,” said Seeff.

Soaring Unemployment and Economic Stagnation

This call follows the release of dire employment data showing that 237,000 more South Africans lost their jobs in Q1, pushing the unemployment rate to 32.9%, with the expanded definition placing it at 43.1%—equating to 12.7 million unemployed.

To make matters worse, South Africa’s economic growth outlook has been slashed by both the IMF and Moody’s to roughly 1% for 2024, after only 0.6% growth last year.

Interest Rates Still Too High

Despite inflation falling to just 2.7% in March, well below SARB’s 3%-6% target range, the interest rate remains 100bps above pre-Covid levels. According to Seeff, this disconnect is stifling economic activity.

“The prolonged period of high interest rates has significantly hampered economic growth and placed severe strain on the property sector,” he said.

Even recent modest cuts have failed to breathe life into the housing market. FNB reported that property sales volumes remain below pre-pandemic levels, suggesting current monetary policy is not stimulating enough.

Impact on Property and Affordable Housing

Despite the tough market, there are promising signs in the affordable housing sector, particularly among women buyers.

Toni Anderson, head of home loans at Standard Bank, revealed that:

• In 2024, 55% of the bank’s 4,831 new affordable housing mortgage clients were women, totalling R2.67 billion in loans.

• That’s up from 51% in 2023, with loans worth R2.58 billion.

• Their affordable loan book grew from R32.6 billion to R33.2 billion, a 1.8% year-on-year increase.

“Homeownership is more than a place to live—it’s about financial security and generational wealth,” said Anderson.

Global Trends Support a Cut

Internationally, central banks are already taking action. Both the Bank of England and European Central Bank recently reduced rates by 25bps. While the US Fed held steady, it’s largely due to lingering effects of the US-China trade tensions—which are now de-escalating.

“With inflation low, the rand stable, and VAT scrapped, there is no reason SARB shouldn’t support the economy with a more meaningful cut,” Seeff added.

Economic realities on the ground point to the urgent need for relief. A 50bps rate cut could provide immediate breathing room for businesses, homeowners, and potential buyers. More importantly, it may help reverse the trajectory of job losses and reignite growth.

As Seeff puts it:

“We’ve seen enough caution. Now we need courage. The Reserve Bank must act.”

{Source: IOL}

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