Kerry Dimmer
MAIN IMAGE: Roger Lotz – franchisee of the Rawson Properties Helderberg Group, André Roux – professor at Stellenbosch Business School, Dawie Roodt – economist, Samuel Seeff – chairman of the Seeff Property Group
Following Donald Trump’s election as the incumbent President of the United States, the USD/ZAR exchange rate appreciated by approximately 2%. Roger Lotz, franchisee of the Rawson Properties Helderberg Group, says that Trump’s proposed tax cuts could potentially slow down further interest rate reductions in South Africa.
“While there is room for more interest rate cuts, South Africa has been cautious in its approach while the USA has taken a more aggressive stance. Confidence in the economy still exists for the USA, but for now, it seems to be a waiting game until the presidency fully plays out, and we hope to see some foreign investment injected into the SA property market.”
News 24, however, was less optimistic, indicating that Trump’s victory “may have just worsened prospects for the Rand, the JSE, and the broader SA economy … Trump’s preference for a weaker dollar needed taboos US exports, even as his ‘America First’ stance potentially also sparks a trade war with China, which will hurt South Africa.’
What are economists saying?
China-US relations are a concern as SA economists react. Economist and futurist Prof André Roux from Stellenbosch Business School has expressed that “Trump’s victory probably does not bode well for Africa, South Africa, or the developing world at large, given Trump’s history of prioritising domestic economic concerns over international partnerships, especially with Africa.” Roux also has concerns about potential trade tensions with China as it may affect African economies that rely on Chinese trade and investment. “Relationships between China and America will probably be more troubled, and any major disruptions could reverberate across Africa’s trade channels.”
Economist Dawie Roodt points out that Trump’s adamancy in imposing new tariffs and US tax cuts would lead to lower economic growth and higher inflation, which will ultimately affect the entire world. Any impulsive decisions Trump makes could leave “South Africa bleeding.”
Local property market impacts
The interest rate is the area the local property market is mainly concerned about. “The US sets the tone for monetary policy globally, and that’s bound to have a knock-on effect for South Africa’s interest rates, inflation, and currency strength, all of which influence our property market,” says Lotz.
“As the US economy ebbs and flows, global investors adjust their portfolios, which can cause currency fluctuations, commodity price shifts, and changes in investor sentiment. For South Africa, whose economy relies heavily on exports – particularly of commodities like gold and platinum – a stronger or weaker US dollar can significantly influence our export revenue.”
He points out that while any post-election boost in the US economy may strengthen the dollar, which has the potential to improve SA’s trade balance, it could also make imports more expensive and add pressure to inflation, forcing the South African Reserve Bank to reconsider its stance on lowering the repo rate.
Samuel Seeff, chairman of the Seeff Property Group, is optimistic. He noted the surging of the US stock market and Dollar currency following the election, “and there is an expectation that it will be good for the global economy, particularly the geopolitical impacts on oil prices.
“Locally, we are already seeing the SA economy improving under the GNU (Government of National Unity), with inflation coming down rapidly. The first-rate cut has already taken effect, and we believe another rate cut should come through at the end of this month, especially as we enter the busy retail season. It will provide vital economic relief and a stimulus, and we would like to see a 50bps cut, especially since there was already some appetite for a higher cut among members of the Monetary Policy Committee,” says Seeff.
“The added impetus could see the property market entering 2025 on a positive footing, potentially with another two rate cuts to follow if inflation and the petrol price remain under control and hopefully improve. An increase in demand and depleting stock levels could improve prices, something we have not seen much of over the last two years. In the meantime, the market is particularly favourable for buyers with the lower interest rate and flat prices, making it an opportune time to buy before the market takes the next upswing.”
Another key consideration is how the US elections may affect foreign investment in South Africa’s property sector. Over the past decade, Lotz says international buyers have been crucial in driving demand in certain hotspots like Cape Town’s luxury property market.
“If the election results in economic uncertainty or a downturn in the US, South Africa could see reduced foreign investment,” says Lotz. “That would have a ripple effect on property prices, particularly in the high-end market.
“However, the South African property market has proved its resilience, time after time,” he says. “International buyers are important, but demand from local buyers continues to grow, and we don’t expect this to change dramatically as long as economic conditions remain relatively stable.” Despite facing economic headwinds, SA continues to offer excellent value compared to international markets. “Even with some short-term challenges, those who can buy property now – especially in well-located areas – stand to benefit from capital growth in the long run,” says Lotz. “The US election might shake things up, but property, unlike many other investments, has shown it can weather these storms.”
