Whatshot
Property Talk
Property Talk
Date: 2016-07-15
The macroeconomic overview indicates an interest rate cycle that has been increasing since 2014, social tensions and political instability, and a deterioration in consumer confidence. This leads in turn to many households becoming more cautious in their spending habits, which begins to reflect in the reasons why people sell residential property.
To date the downscaling due to financial pressure has not as yet seen a dramatic change. Currently measured at 14% as at the 2nd quarter of 2016, this figure is mildly up from the 11% low recorded in the 3rd quarter of 2015. The increase does however reflect a gradual trend change following a steady declining trend that started towards the end of 2009. Of the households downscaling due to financial pressure, what has changed recently is that they are now electing to rent down rather than buy down. Through most of 2013 and 2014 the sellers were mostly electing to buy a cheaper property (60-66% of them). As of the 2nd quarter of 2016 only 47% are now buying a cheaper property and 53% are renting a property as an alternate to owning. On a regional basis, Cape Town and Tshwane recorded the lowest estimate for sellers selling in order to downgrade at 11%. Mandela Bay and Ethekwini recorded the highest estimate at 16%.
The single biggest driver of selling remains the selling in order to downscale with life stage, estimated at 26% as of 2nd quarter of 2016. These sellers find themselves with larger homes once the children have left and are looking for smaller homes that may offer a lock-up-and-go solution.
Selling in order to emigrate is currently recorded at 4,6% of total selling and although up from the low of 2% recorded in 2013 is relatively low as compared to the peak of 20% in 2008. Although domestically consumer confidence is low, the global economic scene has been in a precarious place characterized by uncertainty. This may have constrained additional emigration selling. The selling in order to relocate within SA - or "semi-gration", is currently recorded at 9%. Apart from the low of 6% recorded in the 2008/9 recession, this reason seems to be consistently around the 9-10% of selling. Most major metropolitan regions individually show between 10-13% of their sellers, selling in order to relocate elsewhere, except for Cape Town, which as the outlier shows a recorded figure of only 5%. Seems like once they are there they stay there. Something I always say about our Dolphin Coast region.
Sellers selling in order to upgrade is currently at 12%, which is down from 14% in the prior quarter and significantly lower than the 20% high reached late in 2013. This figure definitely shows a more cautious approach by households and indicates financial pressure. The last three reasons to sell, being moving for safety and security reasons, change in family structure, and moving to be closer to amenities are currently recorded as 12%; 15% and 8% and remain consistently and predictably within a narrow band around these numbers.
For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.
Andreas Wassenaar
Principal - Seeff Dolphin Coast
Cell: 082 837 9094