South Africa's real estate sector is expected to feel the effects of the US tariff decision for at least a few months while the country's businesses adapt.
Image: Tomas Wells/Pexels
If South Africa is unable to significantly increase its exports to other countries, the United States' 30% tariff on all the country’s imported goods could set back the local property market.
On the other hand, it could also create exceptional opportunities for astute real estate buyers and investors, according to Berry Everitt, the CEO of the Chas Everitt International Property Group.
He noted that the new tariff level will make SA goods more expensive and thus less attractive for US consumers to buy "and so is likely to cause a drop in demand that will have repercussions not only for the South African exporting companies and their employees but also for the broader economy and the real estate market".
The international property group said the US is currently SA's second-biggest bilateral trading partner, with total goods trade amounting to $20.5bn in 2024.
South African exports to the US were valued at $14.7bn, while imports stood at $5.8bn. This resulted in a trade deficit of $8.8bn for the US, which US President Donald Trump regarded as untenable.
This was made clear in a letter he sent to SA President Cyril Ramaphosa on Monday, which also warned that if SA were to respond by raising its tariffs on US imports, the amount of that increase would be added to the 30%.
"The new tariff level threatens key export sectors, notably automotive, agriculture and mining, all of which are major employers, and initial projections are that this move will immediately reduce South Africa's economic growth by around 0.3 percentage points," says Everitt.
"In addition, the decision has already weakened the Rand, which will make it more expensive for SA to import certain things that it needs, such as fuel. This will push up prices and inflation for SA consumers and lessen the chance of future interest rate cuts."
However, he points out that many SA exporters are already exploring alternative markets, leveraging agreements like the African Continental Free Trade Area (AfCFTA) to bolster intra-African trade and reduce dependency on the US market.
He said SA's membership of the BRICS+ trade group, which is currently meeting in Brazil, may also assist local exporters in finding large new markets, especially in China, South East Asia and the UAE, to offset the US trade they lose.
And China, for example, announced last month that it was removing all tariffs on imports from the 53 African nations with which it has diplomatic ties, a move that will make SA products cheaper, and more attractive, to Chinese consumers.
"Meanwhile, we do expect the real estate sector to feel the effects of the US tariff decision for at least a few months while SA businesses adapt. There could be job losses in the export-driven industries, and the banks are likely to be more cautious about approving home loans," Everitt said.
He said this will slow demand for both residential and commercial properties and cause many investors and developers to press pause on new projects.
"The other side of this coin, though, is that property price growth will stabilise for a period and create opportunities for those who have a positive view of SA's longer-term future, as we have, to negotiate with sellers and buy at prices that will prove to be highly advantageous.
"What is more, we believe many buyers will soon find the real estate market one of the better places to invest as stock markets around the world become more volatile in response to the shifting US tariff scenario.
"As a member of Leading Real Estate Companies of the World, we have seen how similar scenarios play out in other countries, and are able to provide sound advice to both buyers and investors seeking to maximise the opportunities now developing in the SA market," Everitt said.
Denese Zaslansky, CEO of the FIRZT Realty group said the United States' decision to impose a 30% tariff on all South African imports from next month is poised to have significant effects on the economy and the property market as well as local exporters.
She noted that while the immediate effects stand to be negative, the tariff decision could prove to be a long-term blessing in disguise for SA property.
"The agricultural, automotive and mining sectors will be the most severely affected by the new tariffs and may well experience some job losses unless the SA government can succeed in its ongoing negotiations to achieve lower tariff rates for these specific sectors,” Zaslansky said.
"Meanwhile economists are saying that the US move could cut SA's projected growth rate from the 1,5% that was expected this year to 1,2%, and the Rand has already weakened by about 1% against the US dollar."
FIRZT said and all of this will affect the real estate sector.
"An economic slowdown and employment uncertainty would of course lower demand for both residential and commercial properties.
"But we believe this will be temporary, at most. Fortunately, many SA businesses have anticipated the higher tariffs and have already been actively seeking out - and finding - alternative markets around the world for their products and services.
Zaslansky said this could accelerate SA's long-term drive to diversify its export markets, cement new trading relationships with other countries and permanently reduce reliance on the US.
"An increasing number of companies are, for example, achieving stronger trade relationships within Africa thanks to the African Continent Free Trade Agreement (AfCFTA), and with other members of both the G20 and the Commonwealth, as well as the members of BRICS+.
"This bodes well for job retention and even creation in due course, and for housing demand."
Zaslansky says that despite the US tariffs, South Africa's relative stability and its rising exposure in other countries are also attracting increasing numbers of foreign investors to the local property market, who are buying up rental home portfolios, as well as luxury properties for their own use.
"They are expecting rental demand and returns to strengthen due to both a shortage of supply currently and to rising demand among those not ready or financially able to buy their own homes yet. In addition, there are many foreigners working on contracts in SA for international companies who prefer to rent.
"In addition, skilled South Africans are increasingly being employed by international companies without having to leave the country, thanks to improved technologies and the growth of remote working. And this means less emigration, which is definitely also helping to stabilise our real estate market."
“The USDZAR traded at R17.70 as the new week got underway,” says Reezwana Sumad, the research analyst at Nedbank CIB.
She said the local unit traded on the back foot throughout the session, although the extent of any weakness was limited.
“In the overnight session, President Trump announced new tariffs on South Africa, and this saw the USDZAR reach highs around R17.87 in the New York session as a result. This morning(Wednesday), the USDZAR is currently trading at R17.80.
"The major currencies largely occupied limited trading ranges, with the EURUSD trading at 1,1745 this morning and the GBPUSD at 1,3636. The USDJPY also lost ground due to trade tariffs. Possible trading range for the USDZAR today is R17.60 to R18.00,” Sumad said.
The analyst said the markets had been anticipating trade tariff announcements for the US; these have been forthcoming, although the possibility of negotiations remains possible.
She said the BRICS nations thus far appear to remain adversarial; the financial markets will remain at the mercy of trade-related headlines in the near term and any rand strength is likely to be limited.
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