Fewer foreigners expected to buy property in SA in 2017
Financial services company FNB says that foreigner buying of domestic property is expected to slow in 2017.
A comeback in the rand throughout 2016 left domestic property significantly higher for foreign buyers. This, along with arguably very high global property values, raising concerns of a slowdown in housing markets, may cause some decline, FNB said.
The FNB House Price Index, when denominated in certain major foreign currencies, points to a sharp average increase in South African home values for some aspirant foreign buyers in the latter stages of 2016.
This is especially the case for UK investors, with the pound having suffered severely at the hands of the Brexit vote – the referendum vote in favour of the UK leaving the European Union.
In US Dollar terms, the FNB House Price Index rose year-on-year by 9.4%, and a slightly more significant 12.9% year-on-year in Euro terms. But in UK currency terms the increase was a sharp 31.2%, the bank said.
South African residential property has thus become more expensive late in 2016 for buyers from the UK, Eurozone and US, particularly in the UK case, said household and property sector strategist, John Loos.
He said that the 2016 FNB Estate Agent Survey showed no noticeable decline in estimated foreigner demand for housing for the year on average, “although late in the year we may well have seen foreigner demand showing signs of leveling out”.
For 2016 as a whole, the average estimate of foreigner buying was 5.2% of total home buying. Despite the rand strengthening through the year, the average for 2016 turned out a little higher than the 5% and 4.5% for 2014 and 2015 respectively.
Admittedly, though, the more significant recovery in foreigner buying came in the years 2011 to 2014, Loos pointed out. “After a low of 2.8% in 2010, the estimate rose steadily to 5% in 2014, thereafter not having moved too significantly. So despite a slightly better estimate in 2016, we could arguably say that 2015 and 2016 represent a broad leveling out in the level of foreigner buying following prior years’ strengthening,” he said.
FNB said that 2016 saw a continuation of the multi-year rising trend in foreign buyers from the rest of the African continent, expressed as a percentage of total foreign buyers of domestic housing.
“From a 10.5% low in 2010, this percentage has risen to a 27.95% average for 2016, the highest annual average estimate for African Continent buyers since we started this survey question back in 2009,” Loos said.
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