Foreigners not factor in SA market
12 May 2009
Foreigners own a mere 0,56% of SA's residential property stock and 1,62% of stock worth more than R500k.
This amounts to 35,000 foreign owners who own 30,661 properties in the country out of a total private stock pool of 5,364,561 properties.
It can be inferred from these figures, released in a new research report by Lightstone, that the magnitude of foreign property ownership is being exaggerated. They are definitely not buying up the country and are only able to push up prices in selected areas.
Andrew Watt, business development director of Lightstone, says the deeds office describes foreign owners as "individual owners without a South African identity number". This excludes companies, trusts and other entities whereby foreigners are able to own property.
However, he says residential properties in foreign hands have risen sharply from 2,189 in 2004 to 30,661 in 2009. "This is an indication that foreign property owners are becoming more comfortable with buying property in their own names, instead of via trusts or companies."
The Western Cape has the biggest percentage of foreign owners – 44,92% of all SA properties, or 13,772 properties. Gauteng is hot on its heels with 34,84% or 10,681 properties, then KwaZulu-Natal with 9,77% or 2,996 properties and the Eastern Cape with 5,35% or 1,641 properties.
Foreign ownership is largest in the R5m or more market segment, where foreigners own 1,058 properties (8,54%) of the total private stock of 12,384 in this segment.
In the R500k to R1,5m market segment, they own 19,712 properties (1,22%) of the total stock of 1,611,547 properties.
Watt says the big difference in these percentages shows that foreigners are playing a more significant role in the more expensive market segment. Although they are not influencing prices in the cheaper segments, they could have an impact on prices in isolated areas such as the Atlantic Seaboard.
Interestingly enough, 49,81% of all properties being bought by foreigners are acquired through bond financing.
He says this is in sharp contrast to the perception that foreigners are cash-buyers. Altogether 38,56% of properties of more than R5m being bought by foreigners were purchased with bonds.
Standard Bank are lending the most to foreign buyers and leads with a market share of 31%, followed by Absa with 29%, Nedbank with 20% and FNB with 14%. - Elma Kloppers, Sake24
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