Picture: ISTOCK
Picture: ISTOCK

Weakened sentiment towards SA is showing in South African property purchases by foreigners, as well as by South Africans living abroad.

"Both foreign 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‚" John Loos‚ household and property sector strategist at FNB‚ said on Wednesday.

"We believe this weakening to be reflective of a dampened investor sentiment towards SA in general‚ which in turn is the result of the country’s multiyear economic stagnation‚ uncertainty regarding future economic policy‚ and widely publicised negative news such as the recent sovereign rating downgrades to ‘junk status’‚ with further rating downgrades mooted as a possibility."

Loos was reporting on the bank’s third quarter 2017 estate agent survey‚ which showed further hints of slowdown in foreign buying of SA property.

The survey‚ predominantly in the six major metros of the country‚ 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 four-quarter moving average basis‚ the estimated percentage of foreign buyers declined from 5.28% to 4.92%.

An aggregation of the agent answers into a Foreign Home Buying Confidence Index‚ showed the index was at its strongest positive level during the final quarter of 2014‚ having climbed to that level starting around 2012 and reflecting prior years’ improvement. "However‚ since 2015 this indicator’s level has fallen‚ and in four of the last six quarters it has been in negative territory‚" Loos noted.

Expat buying of local residential property has also been on a gradual broad declining trend.

The survey showed that in the final quarter of 2014‚ the estimated level of expat buying was 2.93% of total home buying‚ with the four-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 fourth-quarter moving average measured 1.42% in the 3rd quarter of 2017.

The bank’s expat home buying confidence index for the third quarter was only slightly negative‚ "but nevertheless sustaining the bias in favour of ‘less expat buyers’‚ a noticeable turnaround from the sustained positive period from late-2010 to end-2014‚" said Loos.

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