Moving and emigration patterns have been affecting house sales and investments
WORDS: YAEL GEFFEN, CEO OF LEW GEFFEN SOTHEBY’S INTERNATIONAL REALTY :: PHOTOS: SUPPLIED AND UNSPLASH
Semigration and emigration have undoubtedly been two key driving forces in the South African property market in recent years and, although anticipated, their resurgence since travel and lockdown restrictions were eased has been unexpectedly robust. Locally, the wave of semigration we’re seeing towards the coast, especially in the Western Cape and along the Garden Route, has significantly boosted the market in this area, with some towns not only experiencing stock shortages but also record sales.
Semigration has been the major driving force in Plettenburg Bay since the end of the hard lockdown with both 2020 and 2021 being record-breaking years for our office in this scenic town. Our George and Wilderness principal, Tim Kirby, also reports hugely increased activity during the past year, with Gauteng residents making up almost 70% of recent buyers.
Although the national semigration trend has been coastal, we are also noting a shift in the inland market, especially towards Johannesburg which is predominantly driven by aspirant young professionals who are following the money and opportunity trail. This has seen a significant boost in sales, with Gauteng, in fact, showing the most activity of any provincial market in 2021, according to Lightstone property research figures.
INVESTMENT DRIVING PROPERTY SALES
Interestingly, though, anecdotal observations from our Johannesburg offices are that many of these property transactions are investment-driven. In other words, people are seeing property as a safe haven right now for long-term savings largely following huge demand for rental property as the city welcomes a wave of new professionals seeking short- to medium-term options while they consider their career prospects locally or as a stepping stone to emigration.
EMIGRATION AS A FACTOR
However, it’s not only local migration that’s impacting the market; the spike in people leaving the country is also having a significant effect on both rentals and sales. There are no accurate statistics for the number of people emigrating, but just prior to the pandemic, the FW de Klerk Foundation in August 2021 estimated that about 3,000 people were leaving SA each month.
And FNB’s recently released January Property Barometer revealed that, on average, 8% of people are selling their homes with plans to leave the country, which is up a percentage point compared to the Q2 2020 report. This figure jumps to 11% in the R3.6 million+ price band and to 14% in the R2.6m-R3.6m+ house price band nationally. To this end, the rental sector has been further fuelled by people who have already sold their homes and are getting ready to emigrate as well as those who are liquidating their assets in the meantime by selling their properties and then renting while they decide if emigration is the right option for them.
This has resulted in increased demand for short-term rentals and furnished properties, both of which are in short supply. Most landlords want long-term tenants and the majority of properties are unfurnished, as there has been little call for furnished homes outside the corporate sector. This is another niche market segment that investors should consider capitalising on while interest rates are so favourable because the uncertainty created by the war in Ukraine will at least temporarily be putting the brake on many people’s plans to relocate.
INTERNATIONAL SALES ROBUST
Although not yet directly impacting the market, the growing number of people wanting to have a firm Plan B in place, such as permanent residency in another country through property investments, means that the migration trend is unlikely to be short-lived. South Africans are also increasingly looking to diversify their real estate portfolios to include more stable markets and they get a respectable bang for their buck in countries such as Spain, Montenegro, Malta and Mauritius, all of which are fast emerging as leading destinations for property investments that deliver returns.
However, it must be added that international real estate property investments has increased globally with prices, especially in the luxury sector, spiking during the past two years. One only has to look at the fact that Sotheby’s International Realty achieved a historic record of $204bn in global sales volume last year to confirm the fact.
PROPERTY REMAINS A SOLID INVESTMENT
Property always has been and always will be considered one of the best long-term investments, and these days more and more people are focused on growing their wealth through property as a buffer against currency depreciation and market volatility. Over and above the impact on the local property market, these trends highlight how much of a global village this market has become and how invaluable an established agency with a broad local reach and international affiliation is these days.
It affords clients access to a vast network that offers them considerable advantages, from established relationships with a worldwide community of professionals to a wide-ranging marketing reach. In other words, a turnkey solution. From buying and selling a home in SA to purchasing a new home abroad or establishing Plan B, dealing with a global agency that can offer a turnkey solution is the best way to conclude all property transactions as seamlessly as possible nowadays.