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Property Talk

Property Talk

Author: Andreas Wassenaar
Date: 2018-03-16

Inter-provincial Re-location

We are all aware of the inter-provincial migration that has been happening in recent years, most notably from Gauteng to the Western Cape and to a lesser extent to KZN and more specifically the North Coast/Ballito area, but how would you accurately measure this migration FNB have come up with a solution with their Inter-provincial repeat buyer migration study.

The methodology applied is to identify all purchases by individuals (natural persons) where there is a corresponding sale by the same individual within a 6-month period prior to their purchase and up to 18 months after their purchase.

These are termed "repeat buying" transactions and a portion of these transactions (16.2% in 2017) are in a province other than the one where the corresponding sale took place. This is then used to estimate the inter-provincial re-location rate or what they call the "repeat buyer semi-gration rate".

The figures show that 2017 was another year of increase in the rate of inter-provincial migration relative to overall repeat home buying. From the estimate of 15.9% in 2016 of overall inter-provincial repeat buying for 2017 was recorded as 16,2%.

This is off a low recorded in 2009 of 6,2%. According to FNB, improved economic growth typically increases the level of employment and economic opportunity, in turn raising the mobility of labour, which drives a greater level of inter-regional migration.

A key driver of the semi-gration phenomena we have been witnessing is the greater search for "quality of life" and "lifestyle" by the country's higher income people. A larger group of retiring people in search of a quieter coastal or rural lifestyle are further adding to this semi-gration behavior.

The Western Cape is still the most popular repeat buyer destination, but its popularity seems to have diminished in the face of a critical water shortage and the rapidly escalating house prices. The net inflow of repeat property buyers to the Western Cape was estimated at +8,4% of total repeat home buyers - still strong but down from the +13,7% estimate for 2016.

This means a higher departure rate along with a lower arrival rate was recorded in 2017. KZN also had an improvement in that the net outflow was reduced from -3,3% of its repeat buyers in 2016 to -2,5% in 2017. Interestingly if we look at the gross outflow of repeat buyers from the top three economic provinces, these figures are 11,6% for the Western Cape, 14,9% for Gauteng and 15,1% for KZN. This means that these relatively low rates of departure from the major provinces enable them to attract and retain skilled labour.

The pool of people that are missed in this repeat buyer study are the younger people who migrate for economic reasons and only purchase their first property in their newly adopted province. The FNB national estimate of first time buyers is 19,54% of all buyers. In Johannesburg and Tshwane these estimates are higher at 23,18% and 31,65% meaning that these destinations are attracting young mobile migrants. The first time buyer estimate for Cape Town is a lowly 8,38% and for Ethekweni it is 13,64%.