South Africa is a highly developed country that benefited much after the government made significant policy improvements last year. Whilst the economy is in a bit of a slump right now, with the country experiencing a 3.2% drop in the first three months of the year. This, however, is not enough to cause property investors to put their confidence and money in the South African property market. Find out the best South African property market to invest in now below:
Real Estate Market of South Africa
Property prices in South Africa are relatively stable, with as much as 60% of the population owning their homes. An entry-level home with an are of 80 to 140 square metres can sell for US$69,000 whilst an average mid-size home can cost around US$85,000.
The country’s residential property market has had a poor run in the past decade. Average prices of prime properties dropping by at least 5% due to weakened South African rand against the dollar. A few other factors contributing to the drop in property prices are rising utility bills, difficulty in securing a home loan, high transfer duties, and threats around land distribution. Foreign investments were also pushed away by visa restrictions placed by the government.
However, not all property markets in South Africa have poor performance. Luxurious residential estates are faring much better with homes in Fancourt, Zimbali, and Val de Vie appreciating by as much as 30%. Luxury apartments are also selling at high price points, making South Africa a highly favoured place for the super-rich. In the Wealth Report 2019 published by New World Wealth and Afrasia Bank, South Africa will see an influx of wealthy buyers. Aside from Joburg and Cape Town, other regions like Umhlanga, La Lucia, Ballito, and Zinkwazi are showing promise as more wealthy individuals choose to settle there.
Top Three South African Places to Invest In
Located about 30 minutes east of Plettenburg Bay, Nature’s Valley is home to a virgin forest and a lagoon. The area lies between the Salt River, the Indian Ocean, the foothills of the Tsitsikamma Mountains, and the Groot River lagoon. In the past years, several old homes have undergone renovation. New houses are continually built in the area as more and more wealthy individuals choose to live in the area.
Another small town near the Plettenburg Bay attracting throngs of wealthy individuals is Keurbooms. Compared with Plett, Keurbooms offers its residents a more secluded and private enclave. A number of wealthy individuals have established their lives in the small town of Keurbooms.
Also known as Nkwazi, this tiny beach town located on the north coast of KwaZulu-Natal province is a tourist-magnet for its lagoon. It also benefited from the growing popularity of Umhalanga.
Foreign Ownership in South Africa
Foreigners can purchase property in South Africa without any restrictions. Mortgage options, however, are limited to just 50% of the total property purchase price for non-residents. Transaction costs, often not included in selling price, can range from 5% to 15% of the property prices. The taxes will depend on the property price range. Note that, although you can buy cheaply in South Africa, the country has hefty capital gains tax. This can negate short-term investment profits. Sellers are mandated to pay as much as 33.3% capital gains tax.