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SA property hit by emigration

By Staff Writer

By Joan Muller, Fin24

The FNB Residential Property Barometer for first quarter 2008 shows that 12% of all sellers included in the bank's quarterly survey plan to leave SA, up from 9% in fourth quarter 2007.

Emigration increases are more pronounced in high net worth areas where homes are typically priced above R2.5m. FNB's data shows that 18% of all sellers in this price category plan to emigrate.

In fact, emigration is the biggest single reason cited for selling in upper-end suburbs.

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Other key reasons for placing properties on the market in luxury suburbs include upgrading (16%), moving for safety and security reasons (12%), relocating within SA (12%) and downscaling with life stage (12%).

However, if all price categories are taken into account, downscaling due to financial pressure ranks as the most important reason for selling with roughly one in every six (15%) homeowners cashing in for financial reasons.

FNB property strategist John Loos says it appears that a rising emigration rate has become a key contributor to weakening housing demand, particularly in more affluent areas.

Loos notes that Eskom's negative impact on sentiment, heightened nervousness amongst minorities caused by a change in ANC leadership, the slowing global economy negatively affecting a slowing local economy and government's poor handling of the Zimbabwe crisis are possibly factors in themselves that are prompting a new wave of emigration.

Estate agents are also reporting an alarming increase in the number of people offloading properties for emigration purposes.

Seeff Properties chairman Samuel Seeff estimates that 25% to 30% of current sellers are planning to leave SA. "Not all of these properties will sell so many people would end up staying in SA. But the general sentiment is not positive. If people were not planning to emigrate, we would never have seen such a surge in sales stock."

Sotheby's International Realty chairperson Lew Geffen echoes a similar sentiment. He says he's seen five recessions in his lifetime, but never before has emigration been so widely cited as the key reason for selling.

Surprisingly, says Geffen, it's not only South Africans in the big-ticket suburbs that plan to go overseas, but also those in middle-income areas.

Industry players say that the increase in emigration could not have come at a worse time for an already depressed residential property market.

While most estate agents have seen a 40% to 50% rise in sales stock since January this year, sales volumes have simultaneously plummeted some 30%.

Prices are also starting to fall in certain areas Standard Bank's latest housing index indicate that median house prices are down 5.2% in March (y-o-y). If the market continues to be flooded with houses for sale, prices will no doubt come under further pressure.

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