In recent years South Africa’s property market has prospered because of overseas buyers, with prices more than trebling since 1998. Tourism has also been booming, with almost half a million British visitors in 2004 against 159,600 in 1994.

The rise in house prices, however, has increased social unrest in the country. There have been riots in the townships and the property boom has become a focus for broader discontent, with political leaders forced from their homes by demonstrators angry that they do not have access to basic services. Andrew Smith, of Cluttons’ Cape Town office, says: “There is a mindset that foreigners purchasing property have pushed up prices and put them out of the reach of the average South African.” Despite enormous change in South Africa, large parts of the country still have poor living conditions. According to official figures, 12 million people live in tin shacks and some 16 million people lack proper sanitation.

The Panel of Experts on Foreign Ownership of Land (PEFOL) was asked by the South African Government to make recommendations on how the situation could be improved. However, suggested measures, including ministerial approval for certain kinds of transactions and a moratorium on the sale of land to foreigners, have attracted criticism.

A document submitted to the Government by the Institute of Estate Agents of South Africa concluded that foreign buyers were not to blame for the general rise in prices, although it did recognise that they had pushed up prices in a few upmarket or holiday locations, primarily in the Western Cape. It also pointed out that sales to foreigners were “very modest”, accounting for less than 1 per cent of residential property sales.

Unfortunately for prospective British buyers, it remains to be seen whether PEFOL’s recommendations are finally adopted. But estate agents such as Andrew Smith say that they believe it unlikely that parliament would approve such a moratorium. He suspects that the announcement may have been a move to gain support from voters. He says: “On March 1 we had our municipal elections, and you may notice that the suggestion of a moratorium has come up at a very appropriate time for the ANC. One tends to think that there is a little bit of politicking behind it.”

Some estate agents do not feel that British buyers will abandon South Africa in droves. Michael Hess, of Overseas Home Search, says: “We don’t believe it will have any impact, because it is not law at this stage — it is purely conjecture. It is quite common for most successful countries to have some sort of restriction in effect at some stage.”

Other observers are more cautious. Lyall Scorovich, of Pam Golding estate agents, does not believe that the moratorium will come into effect, but she does think that people will be more hesitant. She accepts that there is an element of risk for buyers but she says: “I don’t think it should put anyone off for the moment”.

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