Potential positives for property in US tariff increase
The United States' decision to impose a 30% tariff on all South African imports from 1 August is poised to have significant effects for the economy and the property market as well as local exporters.
So says Denese Zaslansky, CEO of the FIRZT Realty group, who notes 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.
"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."
And all of this will affect the real estate sector, she says. "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.
"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 contract 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."
Issued by FIRZT Realty
For media inquiries contact
Denese Zaslansky on
082 560 1618
Or visit www.firzt.co.za
About FIRZT Realty
Established in 2003, FIRZT Realty initially focused on residential real estate, but has since expanded to offer a broad range of services in both the residential and commercial property sectors, including sales, rentals, auctions and property management.