Decline in foreigners buying homes in SA
WEAKENED sentiment towards South Africa is showing in the level of property buys by foreigners and expats living abroad who want homes in their country of birth.
“Both foreigner buying of residential property as well as South African expat buying are perceived to have moved gradually weaker‚ the former since late last year and the latter since 2015‚” FNB household and property sector strategist John Loos said yesterday.
“We believe this weakening to be reflective of a dampened investor sentiment towards South Africa.
“That, in turn, is the result of the country’s multi-year economic stagnation‚ uncertainty regarding future economic policy and widely publicised negative news like the sovereign rating downgrades to junk status‚ with further rating downgrades a possibility.”
Loos was reporting on the bank’s third quarter Estate Agent Survey‚ which showed further hints of slowdown in foreigner buying of South Africa property.
The survey‚ mainly in the six major metros‚ asked agents to estimate the number of foreigners buying South African houses as a percentage of total house buying.
This year’s third quarter estimate was significantly lower than the second quarter estimate‚ dropping from 4.92% to 3.31%.
On a four-quarter average‚ the estimated percentage of foreign buys declined from 5.28% to 4.92%.
With those answers in a foreign home buying confidence index‚ it showed the index was at its strongest positive level in the final quarter of 2014‚ having climbed to that level from around 2012 and reflecting prior years’ improvement.
“However‚ since 2015 this indicator’s level has fallen‚ and in four of the last six quarters, it has been in negative territory‚” Loos said.
Expat buying of property had also been on a gradual decline.
“Our Expat Home Buying Confidence Index for the third quarter was only slightly negative‚ but nevertheless sustaining the bias in favour of less expat buyers‚ a noticeable turnaround from late-2010 to end-2014‚” Loos said.