As we approach the end of Q1 2025, South Africa’s macroeconomic landscape presents a mix of optimism and caution. The recent establishment of the Government of National Unity (GNU), the easing of interest rates, and the surprising disappearance of load shedding have been significant positives. However, rising debt levels—both at a household and national level—are creating pressure points that cannot be ignored.

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At WeconnectU’s ENGAGE 2025 In-Person event, where we hosted over 1,000 delegates, we experienced a renewed sense of optimism in the community management sector. As part of these discussions, John Loos, Senior Economist at FNB, sat down with Tobie van der Merwe, National Sales Mananger at WeconnectU to explore the economic realities facing property professionals today.

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From interest rates and the Expropriation Bill to global economic shifts and property sector trends, this Q&A unpacks the biggest factors shaping the industry.

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1. Interest Rates: What to Expect for the Rest of 2025?

With the current repo rate at 7.5% and a prime lending rate of 11%, many property professionals are asking: Will rates drop further, and if so, by how much?

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Loos predicts a moderate downward trend, with another potential 50 basis points of cuts. However, he warns that global inflation risks and geopolitical uncertainties could disrupt this trajectory. Central banks worldwide, including the US Federal Reserve, are closely watching inflation, which remains stubbornly above target levels.

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A key takeaway? Property owners should not bank on significant interest rate relief but rather prepare for a more stable rate environment moving forward.

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2. The Expropriation Bill: What Does It Really Mean?

On 23 January 2025, President Cyril Ramaphosa signed the Expropriation Bill into law, reigniting debates about property rights and economic stability.

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Loos explains that while expropriation without compensation is a long-standing political issue, its practical application remains uncertain. Although land reform debates often focus on agricultural land, this bill covers all types of property, including urban real estate and intellectual property. And while we don’t know what the Act holds for us in future, we do know that South Africa is rapidly urbanising, and that urban land pressures and housing shortages are, and have been for a while, a major challenge.

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Key Concerns for the Property Industry:

• In our urban areas, with or without the Land Expropriation Act, the key concern, and thus the focus, must remain the good management of properties, clusters and apartment buildings, in order that they remain secured and that the property rights of the owners are thus secure as far as is possible.

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There may well be a “perception risk” around the Land Expropriation Act, Loos says, but the urban land and housing shortages are “real risks”, with our major cities being severely challenged to keep up with the rate of population growth through housing and infrastructure delivery.

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3. Global Trends Affecting South Africa’s Economy

International economic and political shifts continue to shape South Africa’s property market. Among the most pressing global developments:

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US-South Africa Relations & AGOA Uncertainty

With Donald Trump winning the US elections, South Africa’s economic relationship with the United States is under renewed strain. Trump has been "quite outspoken" about South Africa’s policies, particularly around land expropriation, and has signalled a tougher stance on trade relations.

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John Loos warns that "Trump is not predictable—he’s a dealmaker", meaning policies can shift rapidly depending on negotiations. However, his "threats of new import tariffs and trade barriers" could impact South Africa’s export industries. The African Growth and Opportunity Act (AGOA), which grants South African exporters duty-free access to the US, could face renewed scrutiny. In addition, trade tariff wars between the US and other major economies risks taking the world economy into a downturn, and this too could impact negatively on the South African economy and property market. But these can only be flagged as key risks, not yet being easily predictable.

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Other Global Factors to Watch:

• US Elections Fallout: With Trump back in office, his unpredictable trade policies could disrupt global markets, increasing inflation risks.
• Grey Listing: South Africa remains under financial scrutiny, making foreign investment less attractive.
• Middle East Conflicts: Geopolitical instability continues to pose risks to oil prices and inflation, and resultant risks to global and local economic conditions.

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With these uncertainties at play, Loos cautions against over-reliance on external factors to drive economic recovery, urging property professionals to "focus on efficiencies and technology to future-proof their businesses" in the face of global volatility.

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4. State of the SA Property Market: Where Are We Headed?

Despite economic headwinds, residential property trends continue to evolve. Loos highlights a notable shift in building plans passed, showing a continued rise in sectional title developments.

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Key Market Trends:

• Sectional Title Growth: Townhouses and apartments now make up nearly 50% of new developments, reflecting urban densification and shifting buyer preferences.
• First-Time Home Buyers (FTHB): Many new buyers underestimate the cost of levies in managed communities, leading to financial strain. Improved financial education is essential to prevent buyer distress.

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Challenges & Opportunities for the Property Sector

Loos stresses that efficiency, technology adoption, and financial literacy will define the future of the property management industry. With rising debt levels, escalating municipal costs, and policy uncertainty, the industry must innovate and adapt to stay competitive given the financial constraints of its client base.

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Final Thought: A Call to Action for the Industry

Loos leaves property professionals with this challenge:

"This is not a time to wait for economic conditions to improve—businesses that invest in efficiencies, technology, and financial education today will be the ones that thrive when the market turns. The property industry must take charge of its future."