More than a fifth of owners selling their homes are nearing retirement age and seeking to scale down.
“The largest percentage of sellers – 21% – is believed to fall into the category ‘Downscaling due to Life Stage’ (in) the second quarter 2013 survey,” concluded the latest First National Bank (FNB) Estate Agent Survey today.
This category “refers to those sellers who desire a smaller home, either because they are getting older or because their offspring have left home”.
In a statement, FNB said the survey had asked people who had sold their homes to give a reason for selling their property.
The eight reasons listed included “downscaling due to financial pressure”, “downscaling with life stage”, “emigrating“, “relocating to elsewhere in SA”, “upgrading”, “moving for safety and security reasons”, “change in family structure” (divorce, etc), and “moving to be closer to amenities”.
While the need to scale down owing to financial pressure and the desire to upgrade were among key drivers of the housing market, they were not the biggest.
“Rather, it is still South Africa’s ageing middle-to-upper income classes that remain the most important driver of residential selling.”
FNB said members of this group were not necessarily under financial pressure to sell.
This motive “could probably be expected to continue to drive strong demand for various forms of retirement property”, as well as for smaller properties in the coming years.
“But while the ‘oldies’ remain the strongest driver of selling, our survey respondents in the second quarter of 2013 continued to point to financial pressure-related selling … remaining significant, at 18% of total selling.
“This is slightly up from the previous quarter’s 15%, although not too much should be read into one quarter’s fluctuation.”
This percentage should serve as “an ongoing caution as to the financial frailty of a significant number of households”.
However, this reason for selling had declined from a peak of 34% recorded four years ago.
“The contribution to supply on the market by financial stress-related downscaling has thus declined noticeably, although (it is) still significant.”
Another key selling group was those planning to upgrade to “better” homes.
“The percentage of sellers selling in order to upgrade rose further in the second quarter survey, to 19% of total sellers.”
Emigration selling, at just over 3%, remained far off its 2008 peak.
“From a low of 2.7% of total selling in the first quarter of 2013, the survey respondents estimated emigration-related selling to be only marginally higher in the second quarter, at 3.09% of total sellers,” said the researchers.
“This is not a meaningful increase. However, this percentage will be closely watched in the coming surveys, as recent times can be seen as a rather negative period in South Africa’s recent economic history, with poor labour relations and significant dissatisfaction with government service delivery causing volatility, which has affected economic performance.”
FNB said the survey results suggested that “the environment favoured the smaller-sized, more affordable home market segments”.
Residential building statistics “will continue to show a multiyear trend towards a smaller average-sized home being completed, as building activity in the smaller-sized and more affordable segment grows more rapidly than in the larger-sized home segment”.
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