Whether you want a family house in the suburbs or a city apartment, the process of acquiring property in South Africa is super simple. This guide explains everything you need to know about purchasing a house in South Africa. You will also find out whether foreigners are allowed to buy property in the country.
An Overview of Homeownership in South Africa
A report released by South Africa’s Department of Statistics in 2022 indicates that over 75% of the residents own the houses they live in. Moreover, the report revealed that the country hosts about 6.5 million residential properties with a combined value of $264 billion.
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Should You Rent or Buy Property in South Africa?
Most people prefer renting a house when they first arrive in South Africa. This gives them enough time to identify their preferred neighborhood and understand the country’s property-buying process.
As of September 2023, nearly 3.5 million houses have been rented in South Africa. Those located in major cities like Cape Town and Johannesburg tend to attract more rental fees.
To rent a house, you need to pay a one-month deposit equivalent to the rental fee. There is also a fee paid to a real estate agency if you contracted them to help you find the rental. After making the deposit, you will enter into a tenancy agreement with your new landlord, usually valid for a year.
Can Foreigners Acquire Property in South Africa?
Yes! There are no restrictions on foreigners who want to buy houses in South Africa. You only have to meet the stipulated visa requirements. To buy a home as a foreigner in South Africa, you must provide several documents, including bank statements, a valid passport, verified paychecks, and proof of address. Moreover, if you are purchasing the property using a mortgage, you must first obtain approval from the South African Reserve Bank confirming that you are eligible to access asset financing.
As a foreigner, expect to make a huge downpayment to obtain a loan from a mortgage lender.
The Real Estate Market in South Africa
The rising inflation has affected the real estate market in South Africa. First Nationaal Bank report shows that house prices in the country have shot 5.3% this year compared to 4.2% in 2022. The data also indicates that it takes two months for listed houses to find new owners.
The bank splits the South African real estate market into five categories:
Entry Market: This contains properties valued at $16,000 or lower.
Affordable Market: Features houses priced between $16,000 and $35,000.
Conventional Market: Properties valued between $35,000 and $50,000 are found in this category.
High-End Market: Contains houses priced between $50,000 and $65,000.
Luxury Market: This category has properties selling for $65,000 or more.
It is worth mentioning that there is a possibility you could pay a different amount to buy a house than the figures provided by First National Bank.
How to Buy a House in South Africa
As stated earlier, you can use the services of a real estate agency to help you find a house faster. Once you find your ideal property, arrange a physical visit to inspect it.
Make an Offer and Sign the Purchase Contract
If the house meets your expectations, you can make an offer to the house owner in writing. If your offer is accepted, you can consider getting into a sale agreement. At this stage, the house owner may require you to make a deposit.
Note that a transfer attorney selected by the seller will be involved in the process of transferring ownership. Moreover, if you are buying the house using a mortgage, the lending bank will appoint a bond attorney to process your application.
The two attorneys will work together to draft a title deed, which will then be submitted to the Deeds Office to be processed.
Assume Ownership of the House
After the Deed Office processes the title deed, listing you as the new owner, you or the lending bank will be required to transfer the remaining balance to the seller to complete the transaction. Once done, you officially become a house owner in South Africa; congratulations!