27 Mar 2013
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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