The United States' decision this week to impose a 30% tariff on all goods imported from South Africa, effective from 1 August, could be a setback for the property market, unless SA is able to significantly increase its exports to other countries.
But it could also create exceptional opportunities for astute real estate buyers and investors.
That's the word from Berry Everitt, CEO of the Chas Everitt International property group, who notes 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 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 regards 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%.
Read more: Confidence on the rise in SA
"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, 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.
SA's membership of the BRICS+ trade group, which is currently meeting in Brazil, may also assist local exporters to find 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.
Read more: Good news in the numbers
"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 says.
"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 SAs 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."
*The SA Department of Trade and Industry is still actively seeking to negotiate exemptions or adjustments to the imposed tariffs before the 1 August deadline.
ISSUED BY
CHAS EVERITT INTERNATIONAL
FOR MORE INFORMATION
CONTACT BERRY EVERITT
ON +27 82 441 3601
OR VISIT www.chaseveritt.co.za
