Sunday, October 21

What kind of property your money buys in other countries

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New homeland means new dreams of purchasing an ideal home away from home

South Africans considering emigration as a means to fulfil, improve or change their lives will more than likely also dream of one day settling down in a home they own in their new country.

And while they may feel home ownership will be achieved more easily out of South Africa, and away from high private medical aid and education costs, they will probably have to adjust their expectations of their ideal home.

According to Pew Research, at least 900 000 South Africans are living outside the country. But conversations and the growing numbers of “emigration clearance sale” posts on social media pages imply the numbers are growing faster than ever.

The research shows the countries home to the highest number of SA expats are the UK, Australia and the US, in that order. Locals who want to “say goodbye to the land of biltong and braais” may find it helpful to know what an entry-level home will cost in each of these regions, says Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa.

“If you plan to buy property when you reach your destination, you need to avoid the trap of converting to rands when doing your research. You will be earning in that country’s currency when you get there so unless you plan to buy from your South African savings, converting is a frivolous exercise,” he says.

Mike Greeff, chief executive Greeff Christie’s International Real Estate, says the UK is popular for its all-round excellent quality of life, multi-cultural society, low crime and unemployment rates, and free medical care.

Australia offers long-term stability for migrants, low fuel costs, a comprehensive medical care system, free schooling at all state-owned schools and good weather throughout the year.

“The US remains a firm favourite with one of the highest qualities of life in the world. The increasing demand for nurses and health professionals also provides job opportunities.”
Goslett advises South Africans against rushing into any decision.

“It is incredibly difficult to purchase a primary residential property if you do not live in that country. My advice would be to rent for a few months and explore their surroundings before deciding where to buy.”

For those South Africans who are ready to put down roots in a new homeland, what should they expect to pay for property, and what will they get for their money?

The UK

London is often referred to as the miniature South Africa, but property here does not come cheap, says Roger Collings of Re/Max Central.

“In prime Central London, you’re looking at around £300 000 (about R5.2 million) for a studio apartment. If you’re lucky, this might also afford you a one-bedroom flat.”

Many prefer to purchase on the outskirts of town and commute into the city. Areas such as Watford offer better value for money. For expats who are intent on buying in London, Collings advises: “For the prime Central London market, invest in smaller properties. Don’t be frightened to go a little out of the city centre as there are good yields to be found in areas that are easily commutable.”

Citing data from UK housing analytics company HomeTrack, Greeff says the average house in the UK costs around £255 000, but what you will get for that varies greatly from area to area. 

“You would probably get a one-bedroom studio flat in London.”

For the same price, one can buy a three-bedroomed terraced home in Bristol, an ultra-stylish two-bedroom flat in Birmingham, or a four-bedroom family home in Manchester, Greeff says.

Australia

As appealing as it may be to live near the Sydney Opera house or Harbour Bridge, Josh Davoren, director of Re/Max Australia, says living in this tourist city “comes at a cost”. 

The median house price in Sydney is about AU$1.1m (about R10.8m). In Brisbane, that number drops to around AU$665 000.

While Davoren thinks properties in Sydney and Melbourne will remain at a premium price point for the foreseeable future, he believes those in other locations will creep up in price.

“We may then even see a bit of a cooling off in prices in Sydney and Melbourne.”

Prices in Australia may seem high when compared to salaries on offer, but Greeff says this can be attributed to the fact that Australia has good weather for most of the year and is greatly sought-after by emigrants.

“Prices in Sydney median at AU$1.15m while Melbourne came in just below at AU$914 000,” Greeff says.

The US

Florida and California are the two states in America with climates most similar to that of South Africa’s, which makes them the most desirable states for South African expats. 

According to the California Association of Realtors’ website, the average price for an entry-level home in Los Angeles stands at around $530 000 (about R7m) and at $1.62m in San Francisco. 

However, John Rainey, regional vice-president of Re/Max Florida, says prices are “somewhat more affordable” there, with entry-level homes starting at around $283 000 in Miami and $240 000 in Orlando.

“Despite a sluggish first quarter owing to Hurricane Irma, the market has rebounded. Housing prices are fairly stable at the moment, but are rising. However, inventory remains low, which currently makes it a seller’s market,” says Rainey.

According to zillow.com, the median sales price in Monroe County is $409 000, while the median sales price in Hardee County is just $50 000, Greeff says. 

“The equivalent three-bedroom purchase in Cape Town would be around R8.7m.  The home would, however, be in a good suburb with excellent access to public transport and amenities. In Joburg, a good three-bedroom property currently averages at R 1.85m.”

The latest Knight Frank Wealth Report revealed that $1m would buy the following square meterage of prime property in these cities:

  • 28m² in London.
  • 48m² in Sydney
  • 90m² in Melbourne.
  • 25m² in New York (new developments only).
  • 58m² in Los Angeles (new developments only).
  • 78m² in Miami.

However, in Cape Town, that amount (about R13.2m) would buy one 157m2 of prime property. In addition to these three countries, Canada and New Zealand are also proving to be popular countries for South African emigrants.

In New Zealand, non-residents are not permitted to buy existing homes as the government attempts to improve the affordability of residential property. 
Foreigners who are living in Canada as non-residents, however, are able to get a bond to buy property. Usually Canadian banks and lenders require them to have a minimum deposit of 35%.

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