According to the FNB Reasons for Selling Homes report, 21 percent of homeowners were downscaling with life stage, 20 percent were upgrading, 14 percent were selling due to financial pressure, 14 percent as a result of change in family structure, 12 percent were moving due to safety and security concerns, 9 percent were moving to be closer to work or amenities, 8 percent were relocating within South Africa and only 2 percent were emigrating.
Of those downscaling due to financial pressure, 63 percent were planning to buy affordable property while 37 percent were planning to rent.
Writing in the report, FNB household and property sector strategist John Loos says upgrade related selling may soon take over from life stage related downscaling as the key reason for selling property.
South Africa’s “oldies” have been estimated to be the key driver of property sales in recent times, selling in order to downscale due to “life stage”, he explains.
Those downscaling with life stage are not necessarily under financial pressure, and can often bide their time to a certain extent while the market is very weak.
However, increasing confidence in the residential property market, as the 2008/9 recession and the last interest rate hiking cycle of 2006-2008 fade in the memories, has seen a rising trend in the percentage of sellers “selling properties in order to upgrade” and this motive may soon be the most common reason for selling property, says Loos.
| Reasons for selling | Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | Q3 2013 | Q4 2013 |
| Downscaling due to financial pressure | 20% | 20% | 20% | 18% | 15% | 18% | 16% | 14% |
| Downscaling with life stage | 23% | 20% | 21% | 23% | 23% | 21% | 23% | 21% |
| Emigrating | 4% | 4% | 3% | 3% | 2.7% | 3.1% | 2.7% | 2.0% |
| Relocating within SA | 9% | 9% | 7% | 7% | 9% | 8% | 8% | 8% |
| Upgrading | 17% | 15% | 16% | 14% | 16% | 19% | 17% | 20% |
| Moving for safety and security reasons | 9% | 12% | 11% | 11% | 11% | 10% | 12% | 12% |
| Change in family structure | 12% | 13% | 15% | 14% | 14% | 12% | 12% | 14% |
| Moving to be closer to work or amenities | 6% | 7% | 8% | 9% | 10% | 8% | 9% | 9% |
The Q4 2013 survey shows a further increase of sellers selling in order to upgrade to 20 percent from 17 percent in the previous quarter (in 2009, this figure was a low of 7 percent).
However, points out Loos, this rising trend is perhaps not only about rising confidence in property, but also about some increase in the number of households that have strengthened their financial position since the recession, along with gradual credit relaxation by banks in recent years.
The percentage of those selling due to financial pressure dropped to 14 percent from 16 percent in the previous quarter and 20 percent in the first quarter of 2012.
Loos says this is the lowest percentage recorded since the survey began in 2007.
Of those downscaling due to financial pressure, 63 percent were planning to buy affordable property while 37 percent were planning to rent.
Loos notes that emigration selling is still very subdued pointing out that for now, deterioration in sentiment towards South Africa, along with Rand weakness, still does not appear to have brought about any noticeable renewed emigration surge.
“This, we still believe to be due to economic and employment weakness abroad despite some mild pick up in the global economy, hampering job prospects for emigrants.”
He adds that this figure has declined to 2 percent from 2.7 percent in the previous quarter. – Denise Mhlanga
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