Older sellers drive SA property sales - survey

Cape Town - Ageing home owners (those older than 50) continue to be the single biggest driver of residential property sales in South Africa at the moment, according to the latest FNB Estate Agent Home Selling Survey.

The survey shows an estimated 26% of sellers in the second quarter of 2016 were selling in order to downscale due to the stage of life they are in. This is the same level as the estimate for the first quarter of 2016, and only slightly less than the level in the second quarter of 2015. During the recession period of 2008 and 2009 only 12% of sales fell in this category.

These sellers are usually downscaling to smaller homes because they are getting older or because their children have left home.

This suggests the group of older home owners still sees the property market as a good seller’s market and are making use of the window of opportunity to offload larger properties, according to John Loos, household and property sector strategist at FNB.    

"We believe the upward trend prior to 2015 in this group’s estimated percentage may be more or less coming to an end, but the still high estimate continues. This group is, theoretically, not in financial difficulty, but would often wish to 'offload' properties that are perhaps too large and costly for their altered requirements."

The current large percentage of sellers falling in this group is believed in part to reflect the various cost escalations associated with property, Loos pointed out. These include security costs, municipal rates and tariff increases that consistently exceed inflation and household income growth.

"These cost increases come at a time when economic and household sector income growth is mediocre at best, and the effective income tax rate is steadily rising," said Loos.

"Given that one’s house is for most of us the largest single driver of expenses, including security, rates and tariffs, but also a myriad of insurance, maintenance and running costs, downscaling to a smaller home can dramatically improve one’s financial position."

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