South African homeowners are downscaling their properties due to financial pressure.
This is according to FNB Estate Agents Survey which took a look at the reasons that people are downscaling their properties.
Financial pressure-induced sales increased slightly to 21% for 2024Q2. This was in line with the historical average and suggested a persistent trend of sellers motivated by high debt-service costs.
People that are selling their homes due to financial pressure would rather downsize than rent which reinforces the continued buying-down trend.
However, this is not the primary reason that people are downscaling their properties.
According to the survey, moving to retirement homes is the most common reason in South Africa that people downscale their homes, accounting for 22% of total sales.
Other reasons for downscaling were semigration or relocation within the country which stayed steady at 14% and exceeded the long-term average.
Upgrading activity has slowed significantly accounting for 14% of sales. This reflects a cautious approach by homeowners in the current market climate.
Sales due to people emigrating was unchanged at 8% which highlights a shift away from the peak observed in 2019.
The survey also revealed affordability concerns and election jitters stalled the property market for 2024Q2.
Siphamandla Mkhwanazi, Senior Economist, FNB said: “Market activity is low due to election jitters and affordability concerns.”
Market activity ratings dropped to an average 5.6 in 2024Q2 from the 5.8 and below the long-term average of 5.9.
According to the survey, the slowdown in market activity translates to longer selling times.
Properties stayed on the market for an average of 12 weeks and two days in 2024Q2, up from the 10 weeks and six days in 2024Q1. This weakening in the market had an impact on all regions and price points.
IOL Business