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Australia Because of the comparable climate
and standard of living, Australia is a popular destination for emigrating
South Africans. The majority of South Africans settle in Sydney (50%),
Perth (30%), Melbourne (15%) and the rest spread around Brisbane and Adelaide,
with average house prices in these cities as follows:
Much like South Africa, Australia has experienced a house price boom. But, unlike South Africa, the housing market has weakened considerably this year, with house price growth falling to 10% from 17% earlier in the year. House price growth in Sydney has fallen by an average of 8%, and in Melbourne by an average of 15%, and further decreases are expected. Australian cities fared well in the annual Mercer HR Global Quality-of-Life survey, most notably Sydney, which ranks in the Top 10 global list of cities in terms of high quality of life. However, the strengthening of the Australian dollar has seen the cost of living in Australian cities rising dramatically, with Sydney placed 20th on the list of the 144 most expensive cities to live in, Melbourne in 67th position and Brisbane in at 87 in a separate cost-of-living survey, also conducted by MercerHR.com. The cost-of-living survey measures the comparative cost of over 200 items including housing, food, clothing and household goods, together with transport and entertainment. The Australian mortgage industry is well-developed and competitive, and offers mortgage products to suit all types of buyers, from first-timers who require 100% financing, to specific products for investment buyers. Interest rates are reasonably stable, with the prime rate at just over 7%. Many houses in Australia are sold via auctions, a method that is not as widely used in South Africa. While this method could be of benefit for sellers, the obvious disadvantage to buyers is that auctions could drive the price up and out of a buyer’s reach. Typically, a 10% cash deposit is required to secure a sale. The UK While Australia seems to be the preferred destination for South African families, the UK, particularly London, is the hot spot for younger South Africans. This in spite of the fact that, according to the Mercer survey, London ranks as the most expensive city in Europe, and the second most expensive city in the world, primarily because of the high cost of renting property. Because of this high rental cost, and the relatively low interest rate (current base rate is 4,5%) in the past five years it has been feasible for many South African’s to purchase property. However, the UK’s house price boom, which has seen house prices increasing by about 19% in the first six months of 2004 alone, has put property out of the reach of many. The average house in London now costs almost £195 000 (R 2 306 8872), with the average in the rest of the country at £151 524 (R1 792 557) – more than double the price in 2000. Indicators point towards a slow-down in the growth of property prices. Nationwide Building Society and Halifax have both reported a drop in price growth – the first fall for two years, and the sharpest fall since December 2000, and South African’s wishing to enter the UK property market would do well to wait. South Africans purchasing property in the UK may find it a frustrating experience. Unlike in South Africa, where a purchase is settled on the acceptance of an offer to purchase (providing bonds are in place and other subjective clauses are met), in the UK a seller may accept a higher offer right up until the time the transfer is registered. Canada Three quarters of all new immigrants
settle in one of Canada’s largest cities – Toronto, Vancouver or Montreal.
Though Canadian cities were historically relatively inexpensive, they
have moved up in the rankings of most expensive cities in Mercer’s cost-of-living
study, due to the strengthening of the Canadian dollar. Toronto is in 89th
position and has become more expensive than a number of US cities. In spite
of this, a number of Canadian cities were featured in the top 20 cities
in the Mercer Global Quality-of-Living Survey, including Ottawa, Montreal,
Toronto and Vancouver.
The current basic interest rate is around 3,72%, and interest rates have remained relatively stable. The mortgage industry is well developed and competitive, but 100% mortgages are not available and 5% of the purchase price is the minimum down payment that will be accepted. Anyone paying a down payment of less than 25% of the purchase price is required to take out mortgage insurance. A view on South Africa While it is certainly true that many South African’s have chosen to leave the country, very many more have chosen to stay and, an increasing number of South African’s are heading back to our shores. A recent web-based poll indicated that many expats cite their friends and family as the reason they want to return. South Africa is at a very exciting stage of development and there is a great amount of confidence in South Africa, not just from South Africans but also from the international community, and this is helping to incite a passion for South Africans living abroad to return home. There has also been a marked slowdown in the number of people emigrating – the US embassy is down 25% on the number of resident applications for the first six months of this year. MercerHR.com has consistently ranked Johannesburg as one of the cheapest cities in the world for a number of years with property, food and entertainment being key to the sound value offered. From a property perspective, South Africa is still a very good place to invest. The latest ABSA House Price Index has reported very strong growth, and the positive indicators are still in motion. In fact, the outlook for property is very good indeed. A number of positive factors have contributed to the strong market. According to the ABSA House Price Index these could include personal tax relief; lower transfer duties on property; strong growth in the real disposable income of households; the improved investment status of property compared with that of other asset classes; relatively low inflation and interest rates; strong domestic demand for housing as a result of an increasing number of households and a rapidly growing middle class amongst previously disadvantaged communities; and continuing foreign demand. The average house prices in the
major centres are as follows:
Furthermore, obtaining finance for the average property has become easier in South Africa – with banks offering 100% bonds and even loans with cost in certain circumstances. Consumers have been the biggest beneficiaries since the advent of the mortgage origination industry in South Africa, as competition between banks on home loan rates has increased dramatically. Banks have been forced to focus on their product development, pricing and service to remain competitive. Any South African’s thinking about emigrating should take into account the number of foreigners that view South Africa as a prime destination. Given the distance and travel time to South Africa, the foreigners and expats investing in South African property must be basing their purchase decision on lifestyle. Foreign buyers invest primarily as a result of lifestyle, and by lifestyle we mean climate, type and size of property and the cost of living. But equally important is the interest rate environment, stability of exchange rates and consistent growth in property values. These are draw cards to foreign investors, and they should also be seen as such by South Africans. .
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