Global trade war sparks concerns for South African property market

THE decision by the U.S. to implement a 90-day pause on most tariffs, excluding China, sent mixed signals through the global markets.

While the move was widely welcomed as temporary relief, experts have warned of potential ripple effects on South Africa’s property sector, with economic instability posing risks to investor confidence and market growth.

Adrian Goslett, regional director and the chief executive of RE/MAX of Southern Africa, highlighted the intricate link between global trade dynamics and local real estate.

“While the 90-day tariff pause offers a momentary respite, the broader implications of global trade policies on South Africa’s property market remain complex,” Goslett said. “Global trade policies significantly influence South Africa’s economy. Tariffs and trade tensions can affect the cost of goods, employment rates, and overall economic growth.”

He explained that when major economies such as the US engaged in trade wars, emerging markets such as South Africa would often bear the brunt. “Economic uncertainty can lead to decreased investor confidence and potential capital outflows, leading to a depreciating rand, increased inflation, and higher interest rates — all of which can dampen the property market.”

A weaker rand could trigger a chain reaction, Goslett warned. “Imported goods become more expensive, contributing to inflationary pressures. To combat inflation, the SA Reserve Bank might raise interest rates, increasing borrowing costs and potentially reducing demand in the property market.”

This comes at a rather delicate time for South African homeowners and buyers. “We have only recently begun to enjoy the respite of lower interest rates — let’s hope conditions don’t force the Reserve Bank to swing back into a hiking cycle,” he said.

The 90-day tariff pause has been seen as a potential stabiliser for global trade relations. Goslett noted that this could ease some economic uncertainties, delaying interest rate hikes.

“For South Africa, a reduction in global trade tensions will hopefully bolster investor confidence, potentially leading to a more stable rand and improved economic conditions conducive to property market growth,” he says.

However, China’s exclusion from the tariff reprieve remains a critical concern. Given China’s dominant role in global trade and its strong economic ties with South Africa, unresolved US-China tensions could still indirectly strain the local economy.

Despite these challenges, Goslett remained optimistic about the long-term value of real estate.

“Despite the uncertainties triggered by global trade tensions, property investment in South Africa remains a resilient asset class, offering long-term appreciation and returns,” he said. “Strategic investors who keep this in mind can navigate short-term volatility and capitalise on opportunities arising from market adjustments.”

His advice to potential buyers: “Property remains a solid foundation within diversified investment portfolios. Those who want to capitalise on the opportunities that emerge during these uncertain times should speak to a reliable real estate professional for some free advice and insights.”

As global trade tensions evolve, South Africa’s property market faces both risks and opportunities. For now, stakeholders will be watching closely, hoping for stability while preparing for potential turbulence ahead.