According to the FNB Estate Agents Survey, South African homeowners are downscaling their properties due to financial pressure.
The survey uncovers the reasons behind this trend, as reported by IOL.
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According to the survey, financial pressure-induced sales increased slightly to 21% for 2024 Q2, which was in line with the ‘historical average’ and suggested a ‘persistent trend of sellers’ driven by high debt-service costs.
Homeowners that are selling their properties due to financial pressure would rather downsize than rent, which reinforces the continued ‘buying-down’ trend.
It should be noted that this is not the primary reason that people are downscaling their properties. Moving to retirement homes remains the most common reason in South Africa that people downscale their homes, which accounts for 22% of total sales, according to the survey.
Other reasons for downscaling include semigration or relocation within the country, which stayed steady at 14% and exceeded ‘the long-term average’.
In addition, upgrading activity slowed significantly, accounting for 14% of sales, which reflected a ‘cautious approach’ by homeowners in the current market climate.
Sales originating from people emigrating were unchanged at 8%, highlighting a shift away from the peak observed in 2019.
Affordability concerns and election jitters stalling the property market for 2024 Q2 were also revealed in the survey.
‘Market activity is low due to election jitters and affordability concerns,’ said Siphamandla Mkhwanazi, Senior Economist, FNB.
In terms of market activity, the ratings dropped to an average of 5.6 in 2024Q2 from 5.8 and below the long-term average of 5.9.
The slowdown in market activity translates to longer selling times, according to the survey.
Other changes include the fact that properties stayed on the market for an average of 12 weeks and two days in 2024 Q2, which is an increase from 10 weeks and six days in 2024 Q1.
This weakening in the market had an impact on ‘all regions and price points’.
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