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Foreign investment: Foreigners reluctant to buy a home in South Africa

John Loos, household and property strategist at FNB, says 2017 will bring a decline in the number of foreigners buying South African property.

This could put the price of luxury property in particular under pressure.

Loos said the strengthening of the Rand has already resulted in local homes becoming more expensive for foreigners in the second half of 2016. 

"This is especially the case for pound investors after the pound was heavily weakened the Brexit voice."

In dollar value, FNB's house price index rose by 9.4% in 2016 and in euro value 12.9%. In pound value, house prices rose by a massive 31.2%.

He believes it could dampen foreign demand for local real estate.

A survey conducted by FNB among estate agents showed that, in especially the six major metropolitan areas, foreigners made up approximately 5.2% of buyers.

This is slightly higher than the 5% in 2014 and 4.5% in 2015. 

Loos says the percentage of foreign buyers will not increase significantly in the future.

In 2017 the percentage may even decline, for the time being, due to the stronger Rand. "Secondly, there are concerns that the global housing markets showed firm growth the last few years, and that it may be time for a correction. We can see that property's popularity as an investment is slightly starting to decline. "

As for home buyers from the rest of Africa, they made up an average of 27.95% of the buyers in 2016 - the highest since FNB the survey began in 2009. The low point was 10.5% in 2010.


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