Fewer South Africans are selling their homes to emigrate than in previous years – but foreign buyers have cut their spending on local shores as well.

According to findings from the FNB Estate Agents Survey, which looks at the primary reasons for selling properties in South Africa’s six major metros, emigration-linked sales in South Africa have decelerated substantially.

Emigration-related property sales have dropped from a peak of 18% in 2019 to an average of 9% of total domestic sales in Q2 2023.

Semigration, on the other hand, has emerged as a more prominent trend, overtaking emigration as a reason for selling.

“These outcomes were shaped by the repercussions of the pandemic (e.g., travel restrictions and Work-From-Home), which generated opposing effects on these patterns – while emigration was tempered, semigration gained impetus,” FNB said.

“Consequently, emigration-related sales have lost prominence within the domestic market.”

Immigration also down

Not only are South Africans not selling their property to move overseas, but international buyers have also reduced their purchasing activity in South Africa.

The number of purchases from foreigners has dropped from the peak of 6% in Q3 2016 to 3% in Q2 2023 – below the long-term average of 4.2%.

“Notwithstanding nuances at an area level, this would suggest that foreigners have broadly not capitalised on advantageous conditions, including a depreciated currency, likely reflecting unfavourable sentiment towards the country,” FNB said.

In addition, the number of ex-pats buying property either to move back home or as an investment has dropped from the roughly 3% peak at the end of 2020 to 2% in Q2 2023.

“While the significance of expat activity has somewhat recovered from the 2018 lows, when such transactions accounted for just 0.5% of the market, it has remained stable around the long-term average of 2.1%,” FNB said.

Counting the cost

The effects of migration also have an effect on house price growth in South Africa, which can be seen in FNB’s definition of net foreign demand.

A negative supply of net foreign demand shows that migration contributes to an excess supply of homes on the market, which exerts downward pressure on prices.

FNB added that South Africa had a period of positive net demand between 2011 and 2014, which peaked at approximately 6% in Q4 2014, coinciding with a period of strong house price growth, which averaged 7.8% in 2014.

However, the net foreign effect has trended downwards over recent years.

The net negative influence on the net foreign demand market did improve from -13% in Q4 2019 to -2% in Q2 2021 due to the improvements in expat activity and declining emigration sales.

However, FNB said that its estimate that net foreign demand reached -4% of domestic volumes in Q2 2023.

“This underscores the demand deficit generated by migration, necessitating local buyers to bridge the gap to maintain equilibrium between supply and demand,” FNB said

“The negative net foreign demand explains, in part, the restrained trajectory of house price growth in South Africa, the other part explained by weak economic and labour market prospects amid tighter financial conditions.”

---

Read: How to get the most when selling your property in South Africa