As the number of South Africans selling to move to other countries rises, so too is the number of foreigners buying here
South Africans have responded to the country’s political and economic instability with the typical human fight or flight response.
The number of South Africans emigrating to New Zealand, Australia, and the United Kingdom is being increasingly seen on social media platforms and growing in official data.
But as many homes are being sold due to emigration, so too are large numbers foreigners buying property in South Africa.
The FNB House Price Index shows more than 7.5% of property owners with their homes on the market are packing up and leaving South Africa’s borders.
This is a trend Nardee Cotterell, chief operations officer at online agency PropertyFox, says will continue “well into 2019 on the back of a weakening sentiment in South Africa, usually related to economic and political woes within the country”.
FNB’s John Loos says emigration rates appear to be on the rise with properties sold in order to emigrate accounting for 9.57% of all sellers in Cape Town,
8% of those in Joburg, and 10.64% of sellers in eThekwini.
“While the Western Cape’s emergence from drought may well have lifted its economic growth back up to a rate higher than other major South African regions, rendering those regions once again relatively unattractive for Capetonians in terms of employment opportunities, there are many economies abroad which boast significantly higher growth rates, and thus more attractive opportunities, than the Western Cape.”
Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says: “Many people will also be leaving the country or looking to buy a residence abroad as insurance and demand for citizen programmes abroad is, therefore, likely to grow.
“We are receiving on average three to five inquiries a week, specifically for Malta, Cyprus and Portugal.”
The popularity of the Cape among foreign buyers is expected to increase, with Greeff Christies International Real Estate chief executive Mike Greeff saying the UK publication The Telegraph named Cape Town the “greatest city on earth”.
“This accolade will likely bode well for the tourism and property market with an anticipated influx of foreign nationals. The Mother City benefits from world-class beaches, the iconic Table Mountain, its premier wine farms and dining selections and an array of good educational institutional and housing options.
“Cape Town beat other thriving cities such as Tokyo in Japan, New York in the US and Sydney in Australia to claim the top spot.”
Figures from Lightstone indicate that 10 697 properties in the Western Cape were sold to foreign buyers between 2014 and 2018. In Gauteng, this number is 19 312 and in KwaZulu-Natal 3 850.
In total, 38 523 properties in the country were bought by foreigners during these five years and accounted for R49.6 billion in sales.
While Nelio Mendes, marketing manager at SAProperty.com, believes many South Africans will be awaiting the outcome of the elections before buying or selling, the fact that the country is out of recession will “possibly encourage a slight increase in foreign buyers investing in buy-to-let properties”.
Take advantage of buyers’ market
The market outlook for 2019 may still be uncertain, but Rudi Botha, chief executive of bond originator BetterBond, says now is a good time to buy property.
The reaction to major economic or political events, as well as property trends, demand and supply, varies from suburb to suburb, so Botha says prospective buyers should set their own purchasing agendas.
Botha says they should buy as soon as have the necessary funds, and get started on building up the equity and creating wealth for themselves.
Naturally, however, there will be some resistance to buying among those people who know they are going to have to move again in a year or two.
“Our advice to these consumers is that it may be better to use this time to save up a substantial deposit for a home in their new location.
“However, those who are staying put should, we believe, buy as soon as they can afford to do so because overall market conditions favour buyers at the moment. There is still a surplus of stock for sale and it is relatively easy to obtain a home loan.”