The impact of Trump’s presidency on South Africa’s property market

As the world assesses the political and economic impact of Donald Trump’s presidency, questions arise about how his policies might ripple through markets well beyond the United States.

In South Africa, one sector likely to be affected is the property market, which could experience both direct and indirect effects from the global shifts and policies instigated by the new US administration.

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, stressed that global political changes always influence local markets.

“While the South African property market is mainly shaped by domestic factors such as interest rates, inflation, and local investor confidence, the broader international environment—especially US policies—cannot be overlooked,” he said.

A key factor to watch is the strength of the rand against the US dollar. Under Trump’s presidency, his “America First” economic policies often led to market fluctuations and volatility in emerging market currencies, including the rand.

A weaker rand raises the cost of imports and could contribute to inflation, which in turn might put pressure on the South African Reserve Bank to increase interest rates.

Higher rates typically make it more expensive for homebuyers and could reduce demand in the property market.

However, there are potential benefits as well, Goslett said, noting out that global uncertainty often drives high-net-worth individuals to invest in property in stable markets.

“South Africa’s real estate market offers attractive opportunities for foreign investors looking for value. This could help offset some of the negative effects of broader global economic challenges,” he said.

Ultimately, the South African property market is influenced by a variety of factors, and while Trump’s policies might not immediately or dramatically affect it, they could have an indirect influence on the market’s performance over time.

The US president on Sunday announced that the United States would halt all aid to South Africa in response to the country’s land expropriation policies, triggering a sharp selloff of the rand.

“The United States won’t stand for it, we will act,” Trump wrote in a post on Truth Social on Sunday evening. “Also, I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”,

In the wake of the announcement, the rand moved above R19 to the dollar, before recovering slightly to R18.95 in Monday trade.

In response, the South African government said it is “looking forward to engaging” with United States of America (US) president Donald Trump’s administration on bilateral relations and other issues.

Trump said on Truth Social: “South Africa is confiscating land and treating certain classes of people VERY BADLY (sic). It is a bad situation that the Radical Left Media doesn’t want to so much as mentioned. 

“A massive Human Rights VIOLATION (sic), at a minimum, is happening for all to see. The United States won’t stand for it, we will act. Also, I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”

However, the new Act states that property may not be expropriated arbitrarily or for a purpose other than a public purpose or in the public interest, president Ramaphosa’s department said.

The Expropriation Act, which underwent a five-year public consultation process, was deliberated in Parliament, and is in line with the South African Constitution.

The Act repeals the Expropriation Act of 1975 and allows for the state to expropriate land in the public interest – subject to just and equitable compensation, the government said.

On Monday morning, the Presidency committed to engaging the US on the new Act.

“The recently adopted Expropriation Act is not a confiscation instrument, but a constitutionally mandated legal process that ensures public access to land in an equitable and just manner as guided by the constitution. 

“South Africa, like the United States of America and other countries, has always had expropriation laws that balance the need for public usage of land and the protection of rights of property owners.

“We look forward to engaging with the Trump administration over our land reform policy and issues of bilateral interest. We are certain that out of those engagements, we will share a better and common understanding over these matters,” the Presidency said.

Government has not confiscated any land

The Presidency has also refuted any allegations that land has been confiscated by the state.

“South Africa is a constitutional democracy that is deeply rooted in the rule of law, justice and equality. The South African government has not confiscated any land.

“The US remains a key strategic political and trade partner for South Africa. With the exception of PEPFAR [U.S. President’s Emergency Plan for AIDS Relief] Aid, which constitutes 17% of South Africa’s HIV/AIDS programme, there is no other significant funding that is provided by the United States in South Africa,” the Presidency said.

Trump cuts off funding to South Africa over land expropriation concerns

US President Donald Trump has announced that he will be cut off all future funding to South Africa, accusing the country of “confiscating” land and “treating certain classes of people very badly.”

The decision comes amid controversy over the South African government’s land expropriation policy, which Trump has demanded be fully investigated.

The issue of land redistribution has been contentious in South Africa, with efforts to address historical inequality under apartheid drawing strong criticism from conservative figures, including South African-born billionaire Elon Musk, a close adviser to Trump.

The new law, signed by South African President Cyril Ramaphosa last month, allows for the government to expropriate land with “nil compensation” in cases deemed to be in the public interest.

On Sunday, Trump voiced his concerns on Truth Social, stating: “South Africa is confiscating land, and treating certain classes of people VERY BADLY. I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”

The South African government has defended the bill, arguing that it does not allow arbitrary expropriation but mandates efforts to negotiate with property owners before any expropriation takes place.

Later, Trump elaborated on his concerns during a briefing with journalists, stating: “South Africa’s leadership is doing some terrible things, horrible things,” without providing specific examples.

He added, “That’s under investigation right now. We’ll make a determination, and until such time as we find out what South Africa is doing – they’re taking away land and confiscating land, and actually they’re doing things that are perhaps far worse than that.”

Ramaphosa signed into law the Expropriation Bill which repeals the pre-democratic Expropriation Act of 1975 and sets out how organs of State may expropriate land in the public interest for varied reasons.

Section 25 of the Constitution recognises expropriation as an essential mechanism for the state to acquire someone’s property for a public purpose or in the public interest, subject to just and equitable compensation being paid.

The bill assented to by president Ramaphosa outlines how expropriation can be done and on what basis. This law will assist all organs of State – local, provincial and national authorities – to expropriate land in the public interest for varied reasons, the government said.

The bill repeals the Expropriation Act and provide a common framework in line with the Constitution to guide the processes and procedures for expropriation of property by organs of state.

In terms of this law, an expropriating authority may not expropriate property arbitrarily or for a purpose other than a public purpose or in the public interest.

Expropriation may not be exercised unless the expropriating authority has without success attempted to reach an agreement with the owner or holder of a right in property for the acquisition thereof on reasonable terms.

An expropriating authority is obliged to enter into negotiations with the owner of a property required for such purposes, the government said.

“An expropriating authority must also attempt to reach an agreement on the acquisition of the property before resorting to expropriation – except in circumstances where the right to use property temporarily is taken on an urgent basis in terms of a provision in the legislation.”

The law provides for disputes to be referred for mediation or to appropriate courts.

Local government dysfunction stalls growth in South Africa’s key cities, report finds

A study by one of the world’s leading academic publishers highlights the pressing need for local government reform in South Africa, focusing on the detrimental effects of poor governance, financial mismanagement, and failing infrastructure in the country’s metropolitan areas on economic growth.

Taylor & Francis, known for its publications in social sciences, science, technology, engineering, and medicine, featured a research note by Ivan Turok and Justin Visagie.

They pointed out that while cities should be the engines of employment and economic activity, many are instead hindering national growth.

The researchers identified a “striking concentration” of employment in urban areas, noting the quantity and nature of these jobs.

“The metros have a more favourable and diverse economic structure than towns and rural areas. However, most have performed poorly over the past decade, thereby dragging down the national economy.”

Business Leadership South Africa (BLSA) CEO Busi Mavuso recently stated that despite being South Africa’s economic powerhouse, Gauteng’s decline in job numbers, the slow disintegration of its largest metros, and persistent political dysfunction are undermining the country’s overall progress.

Mavuso said that the province has acted as a major hindrance to the nation’s economic growth, pointing out the significant deterioration in Gauteng’s major metropolitan areas, with political instability and dysfunction stalling economic performance.

Given that the province accounts for a third of South Africa’s GDP, this has a ripple effect on the national economy.

“Political dysfunction has a real cost in economic performance,” Mavuso said. “So, while the GNU is delivering improved confidence nationally, the experience of much of Gauteng remains negative.”

Turok and Visagie called for further research into spatial inequalities and labour market dynamics, emphasizing that the deteriorating governance in metros requires urgent attention from national authorities due to their critical role in the economy.

“Most of the metros have performed poorly over the last decade. It is difficult to imagine the national economy prospering as long as the main cities struggle and stagnate,” they stated.

The findings underscore the dysfunction and mismanagement plaguing South Africa’s metropolitan areas, which house key industries such as food and beverage production, chemicals, and pharmaceuticals.

These areas are grappling with crises in energy, water, transport, and logistics, along with widespread financial mismanagement.

This study is released as South Africa prepares to place greater focus on the performance of its metros and municipalities through the government’s Operation Vulindlela 2.0 initiative.

The programme, launched by president Cyril Ramaphosa’s office and the Treasury in 2020, aims to expedite reforms.

The research also highlights the alarming level of debt municipalities have accumulated with Eskom, now totalling R109.4 billion—an 18-fold increase from the R5 billion owed in 2015—jeopardising efforts to stabilize the national power utility.

Turok and Visagie argue that it is unfair to expect metros to adequately support incoming populations without substantial state backing for public infrastructure and essential services.

Their study found that the five largest metros—Johannesburg, Cape Town, Tshwane, eThekwini, and Ekurhuleni—account for nearly 60% of the nation’s formal employment.

However, the researchers cautioned, “One could argue that this map does not adequately capture the economic significance of the metros because they cover such a small proportion of the country’s territory.”

They also warned that overemphasis on this map could result in metros receiving insufficient attention from decision-makers. “Repeated use of this kind of map over many years could perhaps contribute to the metros receiving less attention than they deserve—or require to realise their potential.”

The study further revealed that none of the metros saw significant employment growth in manufacturing or other tradable goods. In fact, the Gauteng metros experienced job losses in manufacturing.

In Cape Town, the majority of employment growth came from retail and wholesale services, followed by administrative sectors such as call centres, labour brokers, and security services, as well as finance and insurance.