South African property investors fleeing to UK market
More South African investors are expected to enter the UK property market due to the economic troubles facing the domestic market in South Africa, which this report suggests are ﻿being caused by a fall in demand. The cause of this decline in demand is said to be the increasing unaffordability of housing, with inflation surpassing wage growth; prices have risen 27% in the last four years, but due to the devaluing rand, investors have lost 23% in value in real terms.

With economic woes starting to affect the domestic housing market in South Africa, more nationals are expected to look to UK property assets for more security for their capital.

The South African property market has lost momentum in recent quarters and investors have increasingly looked to diversify into the British real estate market, as property transaction activity at home continues to decline.

According to the FNB South African Estate Agent Survey published by South African First National Bank (FNB), estate agents in the country point to a decline in residential market activity, suggesting slowing demand. The main factor behind the slow-down of domestic demand for property in South Africa is predominantly the issue of affordability, as income inflation fails to keep pace with property price growth.

Property prices continue to outstrip income growth in South Africa

Although some of the supply issues in South Africa are starting to ease, agents have already seen a reduction in viewings, meaning many of these new properties could be left unsold. John Loos, household and property sector strategist at FNB said: "This shift to a slowing direction may finally be starting to reflect a multi-year stagnation in South African economic growth as well as gradual interest rate hiking by the South African Reserve Bank".

He explained there are several economic reasons why demand will continue to weaken, most notably the fact that incomes have failed to keep up with house prices. House price inflation has spurred many South Africans to consider making a property investment but the rand's underlying weakness and the volatile economy has taken its toll. In South Africa, prices have risen 27% in the last four years, but due to the devaluing rand, investors have lost 23% in value in real terms.

As this realisation hits more and more South African property investors, buy-to-let home buying in the country has declined from 9% of the overall market to 8% in the last three months, according to FNB.

UK BTL markets offer greater security and value growth potential for SA investors

The UK has become a favoured destination for many South African property investors, citing continued economic growth and sterling-based returns as the primary reasons for buying British real estate.

Propwealth is a UK-based company owned by South Africans that is taking advantage of heightened interest in UK income-generating property assets from wealthy South African investors by providing a comprehensive service from sourcing BTL investment opportunities in the UK to rental and property management, creating ideal armchair investments for South Africans.

Director of Propwealth, Anthony Doyle says the formula is simple. "We invest in below market properties; we get the best yields possible, buy in up-and-coming areas and set up full management. This guarantees a strong tenant base and no headaches for the investor as the property is fully managed. Best of all, our South African investors own a piece of real estate in the UK. It's all safe and secure".

Propwealth's main focus of investment is both in London and Liverpool which according to the company's website 'offer both cash flow and capital growth for investors developing a balanced portfolio. London is performing extremely well and offers exceptional capital growth. Liverpool is entry level investing and offers very good cash flow return'.

As a further incentive for wealthy South Africans looking to secure investment capital in the UK's lucrative property markets, Propwealth works with large banks to secure their investors excellent offshore mortgages, normally at 70% loan-to-value (LTV), at interest rates of 3.99%.