FNB has recently released their House Price Index for August 2018 and the results show a strong upward trend in people selling their homes in order to emigrate. The House Price Index is based on FNB’s own valuations database and includes no properties lower than R20 000 or higher than R15 million when compiling its data.
Reasons for selling South African property
Buyers, sellers and real estate agents are also asked a series of questions when compiling the data – and one of the most important of these is why they are selling their homes. The latest answers to this question, for Q2 in 2018 are as follows:
- Downscaling due to financial pressures – 14.7%
- Downscaling due to life stage – 24%
- Emigrating – 7.8%
- Relocating within South Africa – 8%
- Upgrading – 11%
- Moving for safety and security reasons – 11%
- Changes in family structure – 16%
- Moving to be closer to work or amenities – 6%
Declining confidence in South Africa
The latest finding highlight that emigrated-related selling has risen considerably since 2013 when it was at a low of 2% to the position it holds today at 7.8% in the second quarter of 2018. At the start of 2018, 7.4% of home sales in South Africa were due to owners emigrating and the FNB property survey shows that only 6% of those owning more expensive homes (average house price R3.53 million) emigrated compared to 8.9% in the lower bracket (average house price R2.81 million)
South Africa’s technical recession is affecting confidence
The decline in South Africa’s GDP of 0.7% in the second quarter of this year indicated that South Africa entered a technical recession. This decline, which followed hot on the heels of a first-quarter GDP decline of 2.2%, hasn’t helped improve general confidence in South Africa’s economy.
According to FNB’s household and property sector strategist, John Loos, emigration-related home-selling started to rise in 2014 and is still somewhat “elevated”. He went on to say, “The economic performance of the country plays a key role in emigration levels, with many highly-skilled labour force participants assessing local economic opportunities relative to those abroad when making decisions”.
The rand was already plummeting prior to the announcement made by Stats SA, with international investors fleeing from an economy that is deemed risky. The declaration that SA is now in a technical recession has furthered the rand’s decline, with the rand falling to R15,23 by midday on 4 September 2018, when the announcement was made by Stats SA.
According to Bloomberg, the pressure on the rand could continue to worsen due to traders’ concerns regarding the land reform issue and the far-reaching consequences it may have.
If you are considering emigrating and you would like to know more about how you can maximise your finances through financial emigration from South Africa, accessing your South African retirement annuity from abroad and our tailor-made tax solutions for South Africans around the world, contact FinGlobal today.
**Please take note that FinGlobal specialises in financial emigration and cannot advise on or assist with the sale or purchase of property in South Africa or abroad. If you would like to transfer money abroad from South Africa, give us a call for a free and no obligation quote.