This is according to John Loos, FNB’s household and property sector strategist, who said the key driver of foreigner housing demand was related to the popularity of property as an asset class globally. “The result is that in our 2016 FNB Estate Agent Survey we did not see any noticeable decline in estimated foreigner demand for housing for the year on average, although late in the year we may well have seen foreigner demand showing signs of ‘leveling out’.”
This slowing demand is also reflected in the FNB House Price Index, when denominated in certain major foreign currencies, which pointed to a sharp average increase in South African home values for foreign buyers in the latter stages of 2016.
“In US dollar terms, the FNB House Price Index rose year-on-year by 9.4%, and a slightly more significant 12.9% year-on-year in euro terms,” said Loos. “But in pound terms the increase was a very sharp 31.2%.
“South African residential property has thus become more expensive late in 2016 for buyers from the UK, Eurozone and US, particularly in the UK case. This rand-driven increase in foreign-denominated values could conceivably have had something of a dampening impact on foreigner demand for domestic property.”