Rate Cuts to Boost Joburg Property Market

Landsdowne Property Group (“Landsdowne” or “the Group”), one of South Africa’s largest residential real estate managers and estate agency company says a cut in interest rates would stimulate the residential property market. The group said despite high interest rates, northern Johannesburg suburbs including Bryanston, Sunninghill and Paulshof offer good value for savvy investors.

Jonathan Kohler, Founder and CEO of Landsdowne commented:

“Property prices in Johannesburg are sitting at levels last seen 14 years ago and we believe now is a good time to buy property in the metro. Courageous investors who take a long-term view will be rewarded when the market turns.”

Kohler said one bathroom and one bath apartments in Johannesburg north offer very good value with net rental yields of 10.27%. This is based on a 45m2 apartment priced at about R680 000 and rented out for R7 000 per month.

A two-bedroom, two-bathroom apartment in Johannesburg priced at R1.2 million and rented for R9 750 per month offer net rental yields of 7.36%. Landsdowne is a sales and rental agency with over 40 000 apartments and freestanding clusters under management.

The group is seeing increased demand for properties in the suburbs including Bryanston, Sunninghill and Paulshof.

Centrally located close to the Sandton and Randburg CBDs and other areas with excellent schools, medical facilities, shopping and entertainment facilities, Bryanston remains a sought-after suburb to buy property. It offers entry level apartments to luxury family homes and residences.

Areas of Interest for Property Owners

According to Lightstone data, in 2021, Bryanston emerged as one of the top 10 locations for people owning multi-properties and was one of the top selling suburbs in the country in 2023. Paulshof and Sunninghill are well-located close to amenities and schools and offer buyers a wider range of properties to choose from.

It is possible to find a one-bedroom apartment in Paulshof for R730 000 making it a great buy-to-let investment property. Kohler said higher-for-longer interest rates coupled with high inflation and rising cost of living are putting pressure on affordability to buy or rent property.

The South African Reserve Bank (SARB) started hiking interest rates in November 2021, and since May 2023, the bank has held rates steady at 8.25% following a cumulative 475 basis points increase. Market consensus is that the Bank would hold rates steady with the first cut expected in September.

Kohler said last month, the group recorded a decline in deals whether in sales or rentals. There are more people wanting to buy or rent property , but their credit records are tainted. “A rate cut would benefit struggling consumers and stimulate activity in the residential property market,” added Kohler.