South African property market update: what’s shaping 2025?

20 March 2025

As South Africa moves into the second quarter of 2025, the property market continues to balance stability, opportunity, and new challenges. Buyers, sellers, and investors are navigating interest rate decisions, adjustments in transfer duties, the proposed VAT increase, and shifting trends in buyer behaviour, rental demand, and property pricing.

We spoke to Tony Clarke, MD of the Rawson Property Group, and Leonard Kondowe, National Manager for Rawson Finance, to unpack the latest developments and what they mean for property stakeholders in 2025.

Interest rates hold steady – a win for market confidence
The South African Reserve Bank (SARB) has kept interest rates unchanged, a move that supports affordability and gives both buyers and homeowners a welcome sense of predictability.

“A stable interest rate environment gives buyers confidence to move forward without fear of sudden repayment increases,” says  Clarke. “For homeowners with existing bonds, it also means no rise in monthly repayments, allowing them to manage budgets more effectively.”

While many were hoping for a rate cut, Clarke sees stability as a positive sign for long-term property growth.

“Steady interest rates encourage consistent market activity rather than drastic shifts," he explains. "This is good for buyers, sellers, and investors looking for predictable conditions."

Budget speech and VAT Increase – how the market is adapting
The 2025 Budget Speech has also introduced changes that will impact homebuyers, developers, and investors.

One of the most notable updates is the proposed increase in the transfer duty threshold, which would mean properties valued at R1.21 million or less are now exempt from transfer duty, up from the previous threshold of R1.1 million.

“This will be a significant boost for first-time buyers,” says Clarke. “Reducing upfront costs makes it easier to enter the market, which should drive increased activity in the lower price brackets.”

However, the proposed VAT increase presents both challenges and opportunities. While it raises costs for developers, buyers, and renters in the short term, Kondowe believes it will also shift market dynamics in a potentially positive direction.

“Higher VAT may temporarily slow the pace of new developments, but it also encourages innovative solutions,” he says. “Developers might explore cost-saving measures and alternative building methods to maintain affordability.”

At the same time, reduced demand for new builds could push buyers toward the secondary market, increasing the value of pre-owned properties.

“This presents opportunities for existing homeowners and investors,” Kondowe adds. “As demand shifts, well-located, pre-owned properties could see an uptick in value, especially in the affordable housing segment.”

Additionally, he stresses that the government must be accountable for how the extra VAT revenue is spent.

“If funds are effectively directed toward infrastructure, housing, and service delivery, this could stimulate job creation, boost consumer confidence, and ultimately benefit the property sector,” Kondowe explains. “More employment opportunities mean greater disposable income, which re-fuels property demand in a cycle that, if nurtured, could drive long-term growth.”

Property pricing trends – buyers have negotiating power
Despite economic pressures, property pricing remains stable, with moderate growth in well-located areas.

“Buyers are still in a strong position when it comes to negotiating,” says Clarke. “Sellers need to be realistic about pricing, especially in a market where affordability remains top of mind.”

Properties in the R1.5 million to R2.5 million price range continue to attract the most interest, while higher-end properties are seeing longer selling times. “The key takeaway for sellers is that correctly priced properties are moving,” Clarke adds.

Bond applications – financial readiness is key
While interest rates remain stable, bond approval is not automatic. Banks are assessing applicants carefully, making financial readiness more important than ever.

“Lenders want to see responsible financial behaviour,” says Kondowe. “That means a solid credit score, a manageable debt load, and, where possible, a deposit to strengthen your application.”

Kondowe encourages buyers to get prequalified before starting their home search.
“A prequalification not only gives you a clear affordability picture but also makes you a stronger candidate when applying for a home loan,” he says.

Rental market – increased demand amid economic shifts
The rental market remains resilient, but changing economic conditions could drive even stronger demand.

“Affordability remains a challenge for many buyers, meaning rental demand will likely grow, especially in key urban areas,” says Clarke.

With new developments facing higher VAT-related costs, renters may turn to existing properties, strengthening the buy-to-let market.

“For landlords, the key is offering value,” says Clarke. "Competitive pricing and good property management will keep vacancies low and returns stable.”

What’s next for the property market?
Both Clarke and Kondowe agree that 2025 is shaping up to be a year of strategic decision-making. Buyers, sellers, and investors must focus on long-term value rather than short-term speculation.

“The property market is resilient and has adapted to economic shifts before,” Kondowe concludes. “With strategic interventions, financial preparedness, and innovative thinking, I really believe the sector has the potential to emerge stronger than ever.”

Key takeaways:

• Buyers should take advantage of stable interest rates, prepare financially, and explore secondary market opportunities.
• Sellers should price realistically – buyers are active, but selective.
• Investors should consider rising rental demand and VAT-driven market shifts before making purchase decisions.