SA Affordable Housing March - April 2019 // Issue: 75 | Page 6

NEWS
Restricting foreign property
investment keeps prices down
In an attempt to keep property prices down, governments
around the world are moving to restrict foreigners from
investing in property in their cities.
Lightstone Property recently reported a steady increase in foreign sales over the past five years in Cape Town.
U
K lawmakers announced in late January that a tax
will be imposed on foreign real estate buyers in
London following years of sky-high prices caused
by investors from the Middle East and Russia, who buy
a significant percentage of the best, centrally-located
properties.
The number of home sales in Vancouver, Canada,
dropped 32% in 2018 from the previous year, following a
series of new taxes, stricter mortgage rules and rising
interest rates. Median prices in Auckland registered its first
annual drop since 2008 after the New Zealand government
passed legislation to restrict foreign buying that it says is
partly to blame for escalating housing costs.
Home prices have dropped 11% in one of Australia’s
largest cities – Sydney – from their 2017 peak following
4
MARCH - APRIL 2019
government restrictions on foreign purchases and
tighter credit.
‘Government action to reduce foreign purchases and / or
stretched borrower affordability has already caused home prices
to stall or fall in cities such as Sydney, Melbourne, Toronto,
Vancouver and Stockholm,’ states a Fitch Ratings report issued
on 15 January 2019, regarding global home price growth.
On the contrary, Lightstone Property recently reported a
steady increase in foreign sales over the past five years in
Cape Town, with just over 7% of current sales coming from
foreign buyers. With Cape Town property prices already
high and the restrictions on other leading cities around the
world, under current circumstances the city can probably
expect to see greater foreign investment and even higher
prices than currently exist.
www.saaffordablehousing.co.za