South Africans hesitant to invest in property
Land expropriation risk
The index, which covers the third quarter of this year, shows a decline in confidence in the investment property sub-sector.
Concerns about the political and economic climate in South Africa, and the risk of land expropriation, are preventing people from buying investment properties in the residential market, according to the latest Absa Homeowner Sentiment Index.
Investment property is bought for the purpose of earning rental and capital appreciation. In other words, it is not occupied by the owner.
The index, which covers the third quarter of this year, shows a decline in confidence in the investment property sub-sector. About 90% of respondents are concerned about the political and economic instability in the country.
"A significantly large proportion of investors with a negative sentiment is concerned about South Africa's future (87%), and that land expropriation without compensation could make property an uncertain investment (62%)," states the index report.
Apart from the decline in confidence in the investment property sub-sector, the survey shows that confidence in the South African property market improved to 82% in the third quarter - four percentage points higher than in the second quarter and at the same level as a year ago. This is despite interest rate hikes making it more expensive to buy property.
The positive change in sentiment is mainly from first-time homeowners and lessees.
"Although there is a strong positive sentiment in the property market, there are indications of potential buyers delaying property purchasing decisions," states the index report.
In November the SA Reserve Bank's Monetary Policy Committee (MPC) increased the repo rate by a further 75 basis points to 7%. This is the seventh consecutive hike, and interest rates are now at their highest level since 2016. The prime rate is now 10.5%.-Fin24
Investment property is bought for the purpose of earning rental and capital appreciation. In other words, it is not occupied by the owner.
The index, which covers the third quarter of this year, shows a decline in confidence in the investment property sub-sector. About 90% of respondents are concerned about the political and economic instability in the country.
"A significantly large proportion of investors with a negative sentiment is concerned about South Africa's future (87%), and that land expropriation without compensation could make property an uncertain investment (62%)," states the index report.
Apart from the decline in confidence in the investment property sub-sector, the survey shows that confidence in the South African property market improved to 82% in the third quarter - four percentage points higher than in the second quarter and at the same level as a year ago. This is despite interest rate hikes making it more expensive to buy property.
The positive change in sentiment is mainly from first-time homeowners and lessees.
"Although there is a strong positive sentiment in the property market, there are indications of potential buyers delaying property purchasing decisions," states the index report.
In November the SA Reserve Bank's Monetary Policy Committee (MPC) increased the repo rate by a further 75 basis points to 7%. This is the seventh consecutive hike, and interest rates are now at their highest level since 2016. The prime rate is now 10.5%.-Fin24
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