Any foreigner can buy real estate in South Africa. This includes – unlike Namibia – farms and agricultural land. Due to the favorable exchange rate, property in South Africa is affordable. For example, a house in a good area of Cape Town, with a swimming pool and a big garden, costs hardly more than $US 250,000.
Apartments are offered for less than $US100,000. In other areas, such as the province of KwaZulu-Natal., it is even cheaper. The Cape region is the safest place for an investment in property, as there is still a strong influx of buyers from the Johannesburg area, which keeps the prices up. The Garden Route is a growth area as well.
Real Estate Agents
The property market in the whole country is firmly in the hands of a few estate agencies. Private sales are relatively rare. In South Africa the agent is paid by the seller, so you can readily turn to an agency (see the real estate info page), if you are interested in buying property. When it comes to signing a contract or an offer to purchase, the agent will look after the required legal proceedings.
To get an idea of the market situation, one has to have a critical look at the available properties in the preferred area. The big newspapers (e.g. Cape Argus) publish a big property section every weekend, where you can find almost all the places for sale, advertised with photos. Many houses are “on show” on Sundays, which means you can view them without a previous appointment.
Real Estate Prices
Property is usually advertised at a price which lies 10 to 15 above the price the seller expects to achieve. You must keep that in mind and make an offer accordingly, if you are interested in buying something. If the seller accepts your offer, a down-payment of 10 per cent is typically required.
The transfer of the property is handled by an attorney, who also secures the transfer of the payment. Registration at the “Deeds Office” takes 6 to 8 weeks. At that time, a transfer duty is charged, which falls between 5 and 8 per cent of the purchase sum, depending on the value of the property. The attorney receives about 1 per cent.
Financing of Property
Be very careful if you are considering financing a house purchase with a bank-loan. The local interest rate stands at approx. 13 per cent at the moment. European banks are very reluctant to finance properties in South Africa, so that cash payment is usually the only option.
Buying a African Farm
Many people dream of owning a farm in Africa. This dream can be fulfilled, but one – particularly a non-farmer – should not underestimate the problems that go with owning an agricultural estate. Without the proper know-how, such a possession can become very costly. In the Cape area, agricultural estates, specially the lucrative wine and fruit farms, have become very expensive.
An affordable option is still an estate in the Natal Midlands, below the Drakensberg, where one can acquire a true paradise with forest, river, streams and lakes on hundreds of hectares for less than $US 300,000. Game farms, especially in Mpumalanga, are interesting investment prospects as well.