Emigration Selling Update (The Bugle)

It was five years ago that we experienced the Eskom Crisis and “load-shedding” became a new word added to the collective national vocabulary over-night. The introduction of the National Credit Act shortly before had immediately impacted on property transfers by almost halving the numbers. The winds of recession were blowing at the time and consumer confidence plummeted. What did shoot up, and actually peaked in the first quarter of 2008 at 20%, was emigration selling of residential property. This is measured by FNB in their regular nationwide estate agent surveys. It is interesting to review where we stand today relative to five years ago. 

From a general economic perspective 2012 was not a great year, and although GDP growth started off well, the 3^rd and 4^th quarters were particularly hard hit by disruptive industrial action across more than just the mining sector. Credit rating downgrades to our sovereign debt at the same time further impacted on business and investor confidence, and precipitated a weakening of the Rand exchange rate as concerns about South Africa’s future stability and prosperity were raised. Sentiment can weigh heavily on residential property owners and the decision to emigrate is often fueled by these negative news bulletins. A weaker Rand can impact home-owners indirectly by impacting on their disposable income. Imported goods, of which a typical home has many, become immediately more expensive. Through its impact on consumer price inflation, higher local prices of imported goods, exert pressure on domestic interest rates, making the cost of home finance more expensive. 

The good news so far, is that there is no evidence as yet of higher rates of emigration selling. The measure of emigration selling in the 2^nd quarter of 2012 was 4% and this dropped to 3% for both the 3^rd and 4^th quarters of 2012. For the 2012 year as whole emigration-related home selling was estimated at 3.4% of total selling, down from 4.1% in 2011. This does not however mean that all is well at home. The relative situation, given a recession in Europe and uncertainty in most of the favoured destination countries for departing South Africans, indicates that the grass is not quite as green in the alternate options. Foreign home buyers in South Africa as a percentage of total buyers is currently estimated at 3.5% as at the 4^th quarter of 2012. The one area that has seen steady growth is the percentage of foreign buyers from other African countries. Buyers of South African residential properties originating from the African continent, as a percentage of the total foreign buyers, is estimated at 22% as at the 4^th quarter of 2012. This is an easy statistic to believe when considering the increasing number of enquiries we deal with in Ballito from buyers north of our borders.

(Author: Andreas Wassenaar, published in The Bugle, 20th Feb 2013)