South African Property Proving Less Attractive to Foreign Buyers

09 August 2011

According to a FNB Estate Agent Survey for the second quarter, there are fewer foreigners buying property in South Africa. Apparently this isn't due to a lack of faith in the South African property market in particular, but is more likely due to fewer foreigners buying property worldwide. Foreign buyers accounted for 3% of residential property sales during the second quarter of 2011, and although if this is slightly better than expected it is still far less than the 7% of sales during early 2005, and there were also significantly more property transactions at this time.


Another reason for foreign buyers avoiding purchasing South African property could be due to the significant increases in home values between 2009 and 2010, especially when viewed using foreign currency rates. If the FNB House Price Index is viewed in UK pounds it has increased by 47.5%, and by 50.6% in euros, and a massive 59.9% in US dollars, even though when viewed in local currency it has increased by just 8.5%. These types of increase make property here look rather expensive although this view seems limited to the residential property sector as other sectors such as commercial property are still seen as attractive assets.


At the moment it is very much a buyers’ market in South Africa, although prices are remaining relatively stable, and experts predict that when investors feel confident enough to re-enter the market house prices should begin to increase again once more. In the long-term South African residential property is likely to present a good investment as the country has been successful in containing national debt levels and preventing crises seen in so many countries. Its financial system has also proved relatively robust during the recent crisis.

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