The Property Investment Market in South Africa

Past, Present & Future

The property market in South Africa has developed from strength to strength since the democratic reforms ending the Apartheid era in 1994. The emergence of a new middle class society with readily disposable incomes, assisted in fuelling the real estate market. Initially property prices were severely undervalued, yet the introduction of the mortgage market lead to a massive expansion of real estate ownership.

Assisting in the growth of the property sector was the repatriation of finances, bought back into the country following the Apartheid years. Once rental control restrictions were lifted in 1999 a new buy-to-let market emerged, assisting with the booming market growth.

The stability in the country’s economy increased spending power, while development of financing facilities accumulated in the real estate market growth, enabling around 20% gains per annum. The South African property market peaked in 2007, having experienced one of the fastest growth markets in the world.

Following the past decade of continuous growth, political stability and economic strength in South Africa, foreign property investors have taken a keen interest in the country. The initiatives of the government for promoting foreign investment and tourism have enabled additional security and confidence to overseas buyers.

The South African property market slowed down in the past 18 months along with other world markets, yet to a lesser extent. Increases in borrowing interest rates, along with stricter criteria for financial lending assisted in slowing down the property market. These methods have been enforced to avoid a severe crash as seen in other world markets, effectively functioning with a limited fall in the sector.

Due to the nature of the South African property sector, long term potential is assured. The huge growth of the internal market, strengthening economy, tourism growth and rental demands enable future expansion and stability.

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