South Africans looking to sell their homes to emigrate
Financial services firm FNB has published its latest property barometer for South Africa, showing some of the key reasons why South Africans are selling their homes right now.
While most homeowners plan to sell to downscale to a smaller home, FNB said that emigration-related sales have also likely ‘bottomed out’ and could increase in some segments on the back of the recent civil unrest in KwaZulu-Natal (KZN) and Gauteng.
Emigration-related sales in South Africa increased steadily between 2015 and 2019, rising from 5% of total sales in 2015 to a record-high of 13.4% in Q2 2019.
This number subsequently dropped to around the 8% mark in 2021 due to a confluence of factors, including international restrictions and a strong property market. However, this is up a percentage point compared to the Q2 2020 report (7%).
“The reason for selling matrix remained broadly unchanged from the previous quarter and shows that sales are still elevated due to financial pressure as well as the slowing trend of emigration-related sales. However, Q3 2021 data might be signalling that emigration sales have bottomed and starting to rise in some segments,” FNB said.
Notably, the KZN region saw an increase in selling due to security reasons, at 11% versus 8% in the previous quarter and 7% for the national average, the bank said.
“It will be interesting to see whether this is a sustained trend or rather a knee-jerk reaction following the riots.”
Wealthy South Africans looking to leave
While the emigration-related selling trend has remained stable at 8% across the country for all home sales, the data shows that wealthier South Africans are more likely to sell up to emigrate.
As many as 14% of home sellers in the R3.6 million house price bracket are selling to emigrate, with this figure dropping by a percentage point to 13% in the R2.6 million – R3.6 million house band.
This is also reflected in South Africa’s labour market where companies have warned of a significant exodus of wealthy taxpayers in recent years.
Izak Smit, chief executive of the Professional Provident Society (PPS), said that the loss of these workers will not only impact revenue collection but also job creation, as many of these individuals develop businesses and generate wealth.
PPS is a financial services firm that caters exclusively to graduate professionals with honours level or higher qualifications. Smit said that around 25% of the group’s clients that left its services in the past year cited emigration as their reason.
Smit’s comments align with Treasury data published by Reuters in August, which shows that the Covid-19 crisis could prove to be a tipping point as more skilled people look to leave the country.
For the first time since the current tax brackets were established six years ago, the country will see a drop in the number of top earners this fiscal year, the data shows.