Emigration hits KZN property

2008-10-14 00:00

The wave of emigration from South Africa over the past year appears to have hit the KwaZulu-Natal residential property market hardest.

According to the results of the FNB Property Barometer survey for the third quarter of 2008, 26% of KZN estate agents polled cited emigration as the reason given by clients for selling their properties.

In comparison, 19% of all respondents in Johannesburg and 21% of respondents in Pretoria cited emigration.

This figure has increased by 10 percentage points from the first quarter of 2008, when only 16% of KZN respondents cited emigration.

A snap survey conducted by The Witness revealed that the Pietermaritzburg property market has not been immune to this trend.

Local estate agents said most of the sellers plan to emigrate to Australia or New Zealand.

About 25% of KZN respondents cited “downscaling due to financial pressure” as the reason given by clients for selling their properties.

The property barometer, which is a survey of estate agents operating across the major regions of South Africa, has been described as a key indicator of activity levels in the market and sentiment among estate agents.

It plunged to an average activity level of 4,1 — an all-time low — from 4,4 in the previous quarter.

A belief that the market is “not very active” is gaining prominence among property professionals, according to the barometer survey.

FNB property strategist John Loos said the proportion of first-time buyers in the market declined to an all-time low of about 12% during the third quarter of 2008.

The proportion of properties sold for less than the asking price increased to almost 90%.

The average period that a property remains on the market has risen to about 20 weeks.

Even the buy-to-let market has thus far struggled to mount a recovery.

Rand Merchant Bank’s financial market research team predicts that the Reserve Bank’s monetary policy committee will only start cutting interest rates in February 2009.

“We have added an additional 50 bp [basis points or half a percentage point] to the cycle (250 bp against 200 bp before),” they added.

kavith@witness.co.za

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