Major emigration shift for South Africans

The latest data from FNB shows that the outlook on the South African housing market is more positive, with fewer South Africans emigrating out of the country compared to five years ago.

According to the latest Estate Agents Survey from FNB, market activity ratings increased to an average of 5.8 in 3Q24, up from 5.6 in 2Q24.

Although this is still slightly below the long-term average of 5.9, the improvement, as well as the continued recovery from recent lows, suggests that the market has bottomed out, particularly since the latter half of 2023.

FNB noted that the uptick in activity was driven by stronger market sentiment in middle-to-high-priced segments.

Despite the resilience of the affordable housing market, heightened interest rates and strict lending conditions cooled activity in the third quarter of 2024. The segment recorded an activity rating down from 7.4 in the previous quarter.

Conversely, activity in the traditional market (middle-to-higher-priced segments) jumped from 5.1 to 5.4, as market sentiment played a more crucial role in driving activity (Figure 4).

Notably, the survey was down before the SARB’s rate cut decision in September.

This shows that sentiment is at a stronger lever in the higher-priced segments, while lower-price markets remain sensitive to interest rate movements.

Looking ahead, 58% of agents anticipate robust market momentum in the near term (in Q4), as agents in higher-priced segments show more enthusiasm.

Agents expect the gradual interest rate cutting cycle (with a cut in November and more in 2025 expected) to have a delayed impact on activity in the affordable market.

The survey also shows regional disparities, with Gauteng and the Western Cape seeing a surge in market activity, while activity levels in Eastern Cape and KwaZulu-Natal moderated.

“Falling home prices in Gauteng may now be drawing buyers’ attention, while we view the moderation in Eastern Cape and KwaZulu-Natal as possibly reflecting a recalibration after a previous increase,” said FNB.

As with previous quarters, the main reasons for property sales remain downscaling due to life stage and financial pressures.

Life-stage downscaling, such as retirees moving into smaller homes, accounted for 22% of total sales, while financial pressure-induced sales increased slightly to 23%.

“These sales, which remain above the long-term average of 18%, reflect the ongoing strain many households face. Sellers motivated by financial pressure continue to favour downsizing rather than renting, reinforcing the persistent buying-down trend,” said FNB.

Upgrading activity slowed to 10%, highlighting a cautious approach to taking on additional debt amid higher interest rates.

Notably, emigration-related sales dropped slightly from 8% to 7%, a far cry from the peak

levels seen in 2019.

In Q1 2019, emigration-driven sales accounted for 14.2% of all total sales.

Although emigration may be down, semigration is heading up, with relocation standing at 14% (far higher than the average of 9%.)

More coming home

Not only are more South Africans not emigrating, but recent reports show that many are coming back home.

Cobus Odendaal, CEO of Lew Geffen Sotheby’s International Realty in Johannesburg and Randburg, said that many South African expats are looking to return home.

“We’ve started to receive enquiries from expats looking to move back and buy property again, which is very encouraging,’ said Odendaal.

This is not the first time a property expert has highlighted the return of South African expats to the nation’s economic hub.

Rory O’Hagan, principal of the Chas Everitt Hyde Park and Sandton office, said that expats are returning in droves to Gauteng, with many moving into the northern suburbs of Johannesburg due to their proximity to Sandton.

International buyers are also emigrating to South Africa.

“We’re also fielding more enquiries from foreign nationals, although this interest is largely centred around return business with existing clients and specific referrals, rather than new entrants into the market, demonstrating the importance of established relationships and trusted networks,” said Odendaal.

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