SA’s 153 000 private residential property investors** , who own 460 000 properties, appear to be losing their appetite for growing their portfolios according to an assessment of data done by Lightstone between 2006 and 2021 which showed year-on-year growth in investor volumes before levelling off in 2022 and falling during 2023 into 2024.

However, Hayley Ivins-Downes, Managing Executive Real Estate at Lightstone, says it is too early to call the decline of investor volumes a trend.

Investor volumes peaked in the R750 000 to R1.5 million value range while 46% of investment properties were not bonded. 7% of metro residential stock and 4% of non-metro residential stock were held by private investors with volumes flat (0% growth), pre-Covid-19.

Approximately 60% of the 153 000 investors owned three properties, 20% owned four properties, 10% five properties and 10% six or more properties. 70% of investment properties had only one investor involved and almost none (0.7%) had more than two, she says.

Residential properties accounted for 87% of investments, with just 13% not classed as residential, most of which (75%) were in non-metro areas pointing towards likely agricultural usage or intent. The volumes of these investor held non-residential properties dropped by a significant 8% post-Covid-19.

Ivins-Downes said there has been a significant decline of natural person owned investment stock in non-metro areas since 2019, and especially stock not classified as residential, while investment stock was slightly up in metro areas on 2019 numbers.

Investor activity has flattened in Cape Town, while Johannesburg and Pretoria (+2%) and Durban (+1%) has grown.

However, volumes could drop as falling rentals push investors to sell – likely the case in the decline in non-metro areas, they could rise as investors want ‘in’ to an area that is attracting interest, or because investors were mopping up properties sold inexpensively under pressure.

“It was highly probable that the lack of investment property in Cape Town was driven by stock shortages pushing house prices up and offering investors an attractive exit on their investments”, she says.

Investor interest in freehold properties located in estates had waned (-4%) and attention shifted to sectional title units within these estates (+4%), which were preferred over sectional title within traditional walled non-estate complexes (-1%).

16% of sectional title properties within traditional residential complexes were in private investor hands, indicative of this category’s popularity with investors.

** Investors who are natural persons owning three or more properties purchased (as opposed to inherited), for R100 000 or more in today’s monetary terms.