Emigration is rife but how does it affect the property market?

There are many factors which affect a country's property market and the value of its real estate. As someone who may potentially be looking to buy or sell their property, it is extremely important to keep on top of these factors and property market trends; so as to ensure that you get the best possible outcome when selling or buying your property.

One of the biggest factors to affect the current property market in South Africa, is emigration. There is a myriad of reasons why more and more South Africans are choosing to bid adieu to our beloved country in favour of moving overseas. The country has endured years of a volatile political and economic climate, although hopefully, the political climate becomes slightly calmer now that we are post-elections. The most common reason for emigration amongst South Africans is that government corruption is rife, as well as the ever-rising crime rate and an unstable economy, which in turn has resulted in a rise in the unemployment rate and an increase in household/living costs.

So, what role does emigration play within the real estate market, especially in affluent areas?

According to FNB's 2nd Quarter Property Barometer which was released in July:

"Emigration-driven sales have become a more prominent feature of the housing market in South Africa over the past two years. According to estate agents, these are estimated to have steadied at around 13.4% in 2Q19, marginally down from 14.2% in 1Q19. This trend is more prevalent in the higher end of the market, although appears to have spilt over to the lower ends as well."

Emigration may be viewed as positive or negative depending on whether you are a buyer or a seller. This is because higher emigration rates generally translate into a real estate climate where there is an influx of properties that are put on the market, which in turn can cause property prices to drop. This scenario ultimately ends up favouring buyers over sellers.

For people who are looking to sell their homes, they may find that the market is currently less active than they would have hoped for, as they find themselves competing against a rise in sales stock and the resultant lower demand. On the other hand, people who are looking to buy homes will find that there are more homes on the market and that the prices for these homes are lower. These lower prices come as a result of the market being in oversupply, especially in higher-value areas. This is because people in higher-value areas are more likely to be able to afford to emigrate. People who are actively trying to emigrate might be more likely to accept lower prices in order to sell their houses as they may need the money to be able to move or they may want to get rid of the house before they leave.

Alternatively, people who have already emigrated and don't urgently need the money may leave the property vacant and in the hands of an agent in the hopes of finding a buyer who is willing to pay the price they are looking for.

In conclusion, it is evident that emigration has to a certain degree, caused an imbalance in the property market, especially in affluent areas. As more and more people who can afford to emigrate do; these areas are flooded with a disproportionate number of houses on sale, in comparison to people who can afford to and want to buy them. This ultimately leads to anyone who wants to sell, having to drop the price of their house in order to attract buyers.

If you are looking into emigrating and would like to get a valuation of your home, contact Hamilton's Property.

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