New property data from FNB shows a decline in the number of South African expats purchasing property locally, which it says is likely due to the current economic environment.
The lender’s Property Barometer report also shows a decline in foreign buying of local property.
“In short, both foreigner buying of domestic residential property as well as South African expat buying of local property are perceived to have moved gradually weaker, the former since late-2016 and the latter since back in 2015,” said property strategist, John Loos.
“We believe this weakening to be reflective of a dampened investor sentiment towards South Africa in general, which in turn is the result of the country’s multi-year economic stagnation, uncertainty regarding future economic policy, and widely publicized negative news such as the recent sovereign rating downgrades to junk status, with further rating downgrades mooted as a possibility.”
Asked if some South Africans, who had previously planned to return home, are deciding not to do so due to the economic and political issues and therefore are no longer buying property? Loos said that why it could be a possibility, the FNB surveys do not go as far as asking people why they have decided against local property purchase.
In its survey, FNB asked agents to estimate the number of foreign citizens buying homes domestically as a percentage of total home buying. The third quarter 2017 estimate was significantly lower than the second quarter estimate, dropping from 4.92% in the previous quarter to 3.31%.
On a 4-quarter moving average basis, FNB noted a decline in the estimated percentage of foreign buyers, from 5.28% for the four quarters up to and including the third quarter of 2016 (the highest 4-quarter average since 2009), to a lower 4.92% for the four quarters up to the third quarter of 2017.
FNB said it has also seen a decline expat purchases. In the final quarter of 2014, the estimated level of Expat buying was 2.93% of total home buying, with the 4-quarter moving average up to that quarter being 2.42% of total buying.
“This percentage has gradually slowed to where both the quarterly estimate and the 4-quarter moving average measured 1.42% in the 3rd quarter of 2017,” Loos said.