South African private residential property investors, people who own and have purchased (not inherited) three or more properties for R100,000 or more in today’s monetary term, are losing their appetite for their growing portfolios, according to Lightstone.
Lightstone is a provider of comprehensive data, analytics and systems on property, automotive and business assets.
In a statement, Lightstone said that the 153,000 South African private residential property investors who own 460 000 properties, appear to be losing their appetite for growing their portfolios.
Hayley Ivins-Downes, Managing Executive Real Estate, Lightstone said that Lightstone’s assessment of data from 2006 until 2021 showed year-on-year rise in investor volumes before levelling off in 2022 and dropping in 2023 and into 2024.
“It is, of course, too early to call the decline of investor volumes a trend, and we will be keeping an eye on the data as the year moves to a close” Ivins-Downes said.
Ivins-Downes said that investor property volumes peaked in the R750,000 to R1,500,000 value range while 46% of investment properties were not bonded.
Currently, 7% of metro residential stock and 4% of non-metro residential stock was held by private investors, with volumes flat on pre-Covid times.
Around 60% of the 153,000 investors owned three properties, 20% had four properties, 10% had five properties and 10% six or more properties while 70% of investment properties had only one investor and 0.7% had more than two investors.
Residential properties made up 87% of investments, with just 13% not classed as residential and 75% were in non-metro areas pointing towards likely agricultural usage or intent.
The volumes of these investor who held non-residential properties had dropped by a significant 8% post Covid.
Sectional titles
Investor interest in freehold properties located in estates had dropped by 4% while attention had shifted to sectional title units within estates (4%), which were preferred over sectional titles that are within traditional walled non-estate complexes (1%).
However, 16% of sectional title properties within traditional residential complexes were owned private investor which shows that this category is popularity with investors.
Are Cape Town investors selling to capitalise on higher prices?
Ivins-Downes said investor activity has flattened in Cape Town, while Johannesburg and Pretoria as well as Durban have grown by 2% and 1% respectively.
“However, volumes could drop as falling rentals push investors to sell due to the decline in non-metro areas
They could also rise as investors want in to an area that is attracting interest, or because under pressure investors are snapping up properties sold inexpensively.
“It was highly probable that the lack of investment property in Cape Town was driven by stock shortages pushing house prices up, and offering investors an attractive exit on their investments”, Ivins-Downes said.
IOL Property