Understanding the future of South Africa's property market amidst SA-US diplomatic tensions

The effects of diplomatic tensions between South Africa and the US on the property sector will only become more apparent over time as the manufacturing and agricultural sectors start to show signs of contraction, says Aluma Capital. 

This is according to Frederick Mitchell, the chief economist at Aluma Capital. The multi-asset product management company says a loss of market share to the US due to tariffs and the loss of the African Growth and Opportunity Act (AGOA), which will permeate through the economy at large.

“At this stage it is really hard to say and only time will tell how the property market will react in time or how severe the reaction will be, but I expect that prices in the property markets may come down as the manufacturing and agricultural sectors’ loss to the US market trickle through the economy and affect all auxiliary sectors related to these two sectors and the people they employ……and the ability of people and businesses to buy property after these movements have been fully absorbed in the economy,” Mitchell says.

SA-US diplomatic tension

Addressing the nation on Sunday evening, President Cyril Ramaphosa said all G20 members attended all the G20-related meetings throughout the year except for one member country: the US.

He said it was regrettable that the United States of America, which is a founding member of the G20 and which takes over the Presidency of the G20 from South Africa next year, chose not to participate in the G20 Leaders’ Summit and the final meetings leading up to it.

Ramaphosa added that it is even more unfortunate that the reasons the US gave for its non-participation were based on baseless and false allegations that South Africa is perpetrating genocide against Afrikaners and the confiscation of land from white people.

He said this is blatant misinformation about South Africa. 

The president said that last month, SA formally handed over the G20 Presidency for 2026 to the United States, observing the appropriate diplomatic protocols. He said that a few days later, US President Donald Trump made a statement to the effect that South Africa would not be invited to participate in the G20 in the United States, citing what Ramaphosa called untrue statements about genocide against Afrikaners and the confiscation of land from white people in our country.

“We must make it clear that South Africa is one of the founding members of the G20 and South Africa is therefore a member of the G20 in its own name and right. We will continue to participate as a full, active and constructive member of the G20,” asserted Ramaphosa on Sunday.

Property impacted slightly differently

At this stage, there is not much because markets seem to have already “factored /priced in” uncertainties as it relates to diplomatic tensions with the US for most asset classes, Aluma says.

It says that, however, property is affected slightly differently as demand and prices for property are mostly affected by interest rates, affordability and market sentiment, that is, market confidence in general. 

The chief economist says the market has already “priced-in” most movements in most asset classes for now at least, which include property prices, but much the same as said above, property is affected slightly differently as demand and prices for property are mostly affected by interest rates, affordability and market sentiment at that specific time. 

Mitchell says that with the interest rates coming down with the recent interest rate announcement last month, which is likely to increase demand for now, if that is anything to go by at this stage. He says they, however, know that most sectors slow down in economic activity, especially in the December festive season, and only pick up after mid-January when the year starts in all seriousness.

It is only from that point on that we can calculate the full effect of diplomatic tensions on the South African economy and property sector when everything returns to “business as usual”, and the effects become more visible in the economy.

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