Fewer home sellers emigrating

Johannesburg - Emigration is no longer a key reason why South African homeowners are offloading their properties, according to a First National Bank report.

FNB's latest residential property barometer released earlier on Monday shows that the percentage of sellers planning to emigrate dropped from a peak of 20% in the third quarter of 2008 to 14% in the fourth quarter.

FNB property strategist John Loos says the significant drop in would-be emigrants could be an important driver of a gradual recovery of what is widely regarded as SA's worst housing slump in nearly two decades.

Apart from the encouraging improvement in the emigration statistics, Loos says there are other signs that housing demand is picking up "mildly". The survey shows that the average time that properties stay on the market has dropped from 20 weeks in third-quarter 2008 to 15 weeks in fourth-quarter 2008.

In addition, the level of first-time buyers as a percentage of total buyers rose from 12% to 17% over the same time. Estate agents surveyed for FNB's property barometer also noted a marginal increase in the number of show house visitors in the last three months of 2008.

However, Loos stresses that despite signs of improving sentiment, house prices will continue to fall in 2009. He says South Africans should not expect any decent capital growth on their bricks and mortar investments before 2011 or 2012.

Says Loos: "Even if interest rates drop by another 300 basis points by year-end, the weak global economy and its impact on SA economic growth will be a big negative factor for residential property in 2009."

The FNB report shows that the two most important reasons why people were selling in fourth-quarter 2008 were downscaling due to financial pressure (26% of all sellers) and downscaling with life stage (14% of all sellers).

Loos says the fact that fewer sellers are "packing for Perth" suggests that the emigration surge seen in first-half 2008 was a temporary event brought about by negative sentiment following the ANC leadership change, the Eskom crisis and Zimbabwe situation.

He argues that FNB's survey clearly indicates that these jitters may be subsiding. He believes South Africans are becoming more comfortable with the political changes in the country. The global economic downturn also makes it less attractive to go abroad.

Says Loos: "People are no longer that excited to move to London now that there is a real prospect that they may be retrenched. It's even possible that a number of expats will return to SA this year, as job losses in the UK and elsewhere start to mount."

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- Fin24.com