FNB’s Estate Agent Survey pointed to a previous strengthening in foreigner buying of domestic residential property as having more-or-less come to an end.
Part of this seeming lack of further strengthening may have to do with a recent recovery in the Rand exchange rate since January, which raises the cost of local property for aspirant foreign buyers.
This is especially true for UK buyers who have suffered from a post-Brexit Referendum Pound weakening, said John Loos, household and property sector strategist at FNB Home Loans, said on Tuesday.
“However, we remain of the view that the performance of residential property globally influences its popularity as an asset class, and is the key influence on foreigner buying direction,” the analyst said.
FNB said that its agent survey suggests that growth in foreigner buying had declined since 2014, despite continued rand declines up to the end of 2015. What had changed earlier, from 2014 onward, was slower global house price growth.
Using a 2-quarter moving average for smoothing purposes, the estimated percentage of foreign buyers has moved in a ‘narrow’ range near to the 5% level over the last 3 quarters.
It moved from 4.8% of total buying in the first quarter of 2016 to 5.11% for the two quarters up to the 2nd quarter of 2016, which is the same as the 5.11% of 3 quarters ago.
After a noticeable recovery in the estimated levels of foreigner buying from a 2% low late in 2010, the estimated percentage of foreign buyers peaked at 5.77% in the final 2 quarters of 2014. So recent quarters’ estimates are a bit off that 2014 estimated high, FNB said.
Foreign buying of SA property by African Continent buyers saw its share of total foreigner buying decline mildly in the 1st half of 2016 to 27.5%, from a second quarter moving average of 31% for the 1st quarter of 2016.
However, this latest percentage remains high compared to a mere 8.5% as at 2010, FNB said.
Splitting up the survey by major region, for the first two quarters of 2016 Cape Town region remains the major South African region with the highest percentage of estimated foreign buying, to the tune of 8%. •Cape Town – 8% • Ethekwini – 6% • Joburg – 5% • Tshwane – 2% • Nelson Mandela Bay – 2%
Article by: FNB