Fewer foreigners and expats are buying in SA

FOREIGN buying of South Africa property has been a declining trend through 2017, according to the latest FNB Estate Agent Survey.

John Loos, FNB’s household and property sector strategist, says given that South Africa as a whole saw this decline, it was not possible to conclude the drop in Cape Town was due to the drought.

The estimated foreigner homebuying percentage in Cape Town, as in the case of the national percentage, has declined in recent quarters, from 8.9% for the two quarters up to and including the first quarter of 2017 to 5.5% by the final quarter last year.

Loos warns however that should the Western Cape drought not be broken this winter, “it would be a dire situation for the region, which could well start to impact negatively on Cape Town-specific foreign-buyer demand”.

Loos says the number of South African expats buying local property also appeared to grow gradually weaker last year.

“We have seen a decline in recent years in this area, although this broad declining trend seems to have been gradual and over a longer duration, having started in 2015,” says Loos.

It was possible this weakening was significantly reflective of dampened investor sentiment towards South Africa in general last year, which is the result of the country’s multi-year economic stagnation, uncertainty regarding future economic policy, and widely publicised negative news, including the recent sovereign rating downgrades to junk status.

“However, we have started 2018 with a noticeably more positive mood in South Africa, which has been in part reflected in a stronger rand.

“Leadership change in the country’s ruling party may have been partly responsible for the positive mood swing, while leading business cycle indicators have for some time also hinted at improved near-term economic performance to come. Should this improved sentiment continue through the year, it is possible foreigner interest may improve,” says Loos.