Contact Us
  
Friday Nov 08, 2013

Fewer property owners sell due to financial pressure

The need to 'downscale due to financial pressure' and the desire to 'upgrade' homes are still key motives in residential property selling.

However, South Africa's aging middle- to upper-income classes who are downscaling because of 'life stage' remains the most important, according to the FNB estate agent survey for the third quarter. The lowerand middle-income segments of the housing market have the most sales activity. There has been a steady rise in the percentage of lower-income households selling to upgrade.

FNB's estate agent survey revealed that 23 percent of sellers were believed to be downscaling due to life stage, 17 percent to upgrade, 16 percent to downscale due to financial pressure, 12 percent were moving for safety and security reasons and the same percentage because of a change in the family structure.

The remainder of the reasons for selling were to move closer to work or amenities (9 percent), relocating within South Africa (8 percent) and emigrating (3 percent).

John Loos, a household and property sector strategist at FNB, said the percentage of sellers believed to be downscaling due to life stage had hovered above the 20 percent level since 2011, compared with the 12 percent registered in the second quarter of 2008.

He said a structural change in the aging population phenomenon might result in this percentage climbing in the coming years, given the strong growth in numbers of people reaching retirement age, making this motive for selling an even more significant supporting factor of residential supply.

But the flipside was that this motive could be expected to drive solid demand for various forms of retirement property and for small properties in the mainstream market.

Loos said selling related to financial pressure remained a significant factor at 16 percent of total selling despite declining from 18 percent in the previous quarter.

He stressed the significant percentage of sellers under pressure was not troublesome because some resurgence in house price growth in recent times would make it easier for these households to trade out of properties without incurring too serious a loss.

While this percentage of sellers should serve as a warning of the financial frailty of a significant number of households, its trend since 2009 had been in the opposite direction to the 'life stage' sellers; a decline from a peak of 34 percent in the second quarter of 2009, he said.

Loos said the two most important indicators in the survey were the proportions of people whose reasons for selling were 'financial pressure' and 'upgrading'.

It was significant that from the first quarter of this year, a bigger percentage of people were upgrading than downscaling due to financial pressure.

He said an analysis of the various reasons for selling appeared to confirm that the market was still at a strong stage of the property cycle despite the survey pointing to a decline in overall residential market activity.

Business ReportĀ 

    
 

Previous Articles *

Search News

Property Searches:

Browse Property For Sale

© 2020 Independent Online Property Joint Venture (Pty) Ltd. All rights reserved.
Reliance on any information this site contains is at your own risk. Please read our Terms and Conditions of Use and Privacy Policy.