SA expats buying homes at home

3 June 2005

More and more South Africans living and working in the UK are buying properties in SA with a view to returning home, with positive media coverage of SA and the local property boom among the reasons for the trend.

Pam Golding Properties’ London office says about a quarter of all inquiries for South African homes come from expatriates wanting to invest in property back home.

The agency told Business Day newspaper recently that this had been encouraged by positive reporting on SA in the British press, with extensive coverage of the country’s property market.

Some 50% of Pam Golding Properties’ expat buyers plan to return to SA in the next year or two, says CEO Andrew Golding. The other half want to acquire a property as an investment for when they return home in the future.

“Since the start of 2005 South Africa has received a great deal of good press in the UK media,” Golding said. “Most ‘holiday and homes abroad’ magazines have included extensive editorials on the property market in South Africa.”

A place in the sun
“A Place in the Sun”, an ITV Channel 4 programme, filmed footage in South Africa and carried a 12-page editorial in its January magazine on buying property in South Africa. Both editions have since carried editorials on the SA property market.

Jawitz Properties MD Herschel Jawitz told Business Day that his group was “definitely seeing” an increasing number of expats both asking about and buying property in SA.

“It is a result of the very positive sentiment that surrounds SA at the moment and the drive by organisations such as the Homecoming Revolution to draw South Africans back home,” Jawitz said.

SA’s leading mortgage originator, Mortgage SA, says it has seen a marked rise in South Africans who live abroad applying for home financing through its website and call centres.

“With the many excellent property websites showcasing South African property, increasing numbers of expats are comfortable buying property this way, then coming to us for financing,” Mortgage SA MD Saul Geffen told Business Day.

A place to invest
Mary-Jane Lefevre of the website Escape Artist says South Africa is at an exciting stage of development, with confidence in the country running high both among citizens and in the international community – and SA property is seen as an excellent investment.

Reasons for this, according to Lefevre, include personal tax relief, lower property transfer duties, growth in household disposable income, low inflation and interest rates, strong domestic demand for housing, a rapidly growing middle class in previously disadvantaged communities, and continuing foreign demand.

The latest Absa index of SA house prices reported strong growth, forecast to continue. SA’s basic home loan rate is currently at 11%, the lowest since 1980, and is unlikely to rise dramatically over the next few years.

And getting finance has become a lot easier as competition between banks has increased, with banks offering 100% bonds and even loans with cost in certain cases.

“South Africans thinking about emigrating should take into account the number of foreigners that view South Africa as a prime destination,” Lefevre says.

“Given the distance and travel time to South Africa, the foreigners and expats investing in South African property must be basing their purchase decision on lifestyle.

“Foreign buyers invest primarily as a result of lifestyle – climate, type and size of property and cost of living. But equally important is the interest rate environment, stability of exchange rates and consistent growth in property values. These are drawcards to foreign investors, and should also be seen as such by South Africans.”

Average house prices in SA’s main centres, according to the Absa index, are as follows:

  • Cape Town – R699 275
  • Johannesburg – R635 123
  • Pretoria – R676 984
  • Bloemfontein – R494 449
  • Durban – R639 707
  • Port Elizabeth – R564 008

According to Mortgage SA, South Africa has one of the best deeds registration systems worldwide, with an exceptional degree of accuracy and of tenure being granted.

Property can be owned individually, jointly in undivided shares, or by an entity such as a company, close corporation, trust, or similar entity registered outside South Africa.

The Power of Property

How to buy South African property
There are a vast number of websites through which South Africans abroad can buy property at home. See the Related Links above right.

But acquiring property from outside the country can be complicated. For this reason, the website Ask Harry has published “The Power of Property”, an “accessible, entertaining and comprehensive guide to the benefits and potential pitfalls of the SA property investment market, from the perspective of a non-SA resident or expat.”

Ask Harry aims “to provide South Africans operating overseas with financially relevant information, to keep you informed so you can make better financial decisions, and eventually bring more money back to SA.” reporter