According to the FNB Estate Agent Survey on Emigration and Foreign Buying, 2008 saw another emigration upturn, peaking at 20 percent of total home sellers in the second quarter of 2008, in a thinly traded market.
According to the FNB Estate Agent Survey on Emigration and Foreign Buying, 2008 saw another emigration upturn, peaking at 20 percent of total home sellers in the second quarter of 2008, in a thinly traded market.
The percentage steadily subsided to the most recent survey’s 2.7 percent of total home sellers, still further down on the previous quarter’s 3.3 percent.
Writing in the report, John Loos, FNB household sector and property strategist says this low emigration-related selling rate, in the face of a very significant deterioration in sentiment towards the country yet again, seems out of line with what has taken place in previous periods of sentiment deterioration.
He notes that economic times have been particularly tough globally over the past four years or so, and unemployment rates in some of the popular South African emigration destinations are high.
“We continue to believe that weak job prospects abroad may continue to be a key constraint on aspirant emigrants, and in better global economic times, recent turbulence in South Africa could have resulted in another emigration surge.”
Loos says the survey still doesn’t show meaningful changes in foreign buying or recently low levels of emigration-related selling.
However, domestic sentiment needs to improve before the global economy recovers more sustainably, he points out.
The currently weak global economic period probably also masks any change in sentiment towards South Africa too, in terms of foreign buyers of South African homes, because foreign buying has been relatively weak since 2010, probably as a result of foreign households also having financial constraints of their own, and property not having been the popular asset class in any case for a few years now, explains Loos.
With regard to foreign buyers, the second quarter moving average for Q1 2013 was unchanged from the previous quarter’s 3.5 percent of total buyers of local residential property.
This remains far from the highs of 6.5 percent in 2008, although better than the 2 percent low reached in late-2010, he notes.
Financial times in economies such as Europe and the UK, from where a significant portion of SA’s foreign buyers come, are currently tough, and that could conceivably be putting pressure on foreign buying, so this source of residential demand could have been expected to be weak with or without domestic sentiment changes, according to Loos.
Estate agents report an increase of home buyers from other African countries, a group that hadn’t appeared to be affected by the recently negative South African environment.
Expressed as a percentage of total foreign buyers, the African contingent increased from 8.5 percent in 2010 to 22 percent for the second quarters to the fourth quarter of 2012.
“South Africa is likely to see further increase in the African foreign buyer percentage, as Africa’s economic fortunes continue to improve and its household wealth grows too.”
However, Loos says as Africa’s economic fortunes improve, so too will its cities and property markets develop.
This will mean that the African property investor will also have more alternatives to South Africa, the African shopper more retail alternatives, and African skilled professionals more alternative places on the continent to be employed.
South Africa will face significantly more competition for skills and foreign property investors on the continent, and sentiment towards it needs to be positive, adds Loos. –Denise Mhlanga
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