JOHANNESBURG - The number of homeowners making improvements to their homes because they “can't afford to buy elsewhere” increased from 10percent at the start of last year to 16percent in the fourth quarter.
An FNB report on residential maintenance and upgrades said 65.5percent of homeowners still did improvements for their own use.
It said that the speculative building motive for home improvements had become progressively less significant through the course of last year and was at 15percent of total home improvements for the two quarters up to the fourth quarter, compared with 18.5percent in the first quarter of the year.
John Loos, a household and property sector analyst at FNB, said estate agents surveyed perceived average home maintenance and upgrade levels to be stronger last year than in 2016.
However, Loos said the quarterly picture emanating from various data sources was of slight weakening in the levels of home maintenance and upgrades from the beginning to the end of last year.
“Not only were agents returning mildly weaker home maintenance and upgrade survey responses in the fourth quarter of 2017 compared to the first quarter of the year, but both hardware retail sales data as well as building data showed some mild year-on-year decline in late 2017, seemingly supportive of estate agent perceptions,” he said.
But Loos said the recent mild deterioration in the home maintenance and upgrades market may be halted this year.
He said the leading business cycle indicators had recently pointed to possible economic strengthening this year, which in turn would support stronger employment creation and household disposable income growth.
He said the home maintenance and upgrades market last year remained significantly better than during the 2008/09 recession, but appeared to soften through the year because of weak economic conditions.
Loos said weak and uncertain economic and financial times could lead to consumers cutting back on unnecessary expenditure or postponing certain less urgent expenditure times.
Home maintenance and upgrades often fell into the less urgent expenditure items category.
Loos said five categories or levels of home maintenance were included in the estate agent survey.
“A slight rise in the two lower categories - ‘only attending to basic maintenance’ and allowing homes to get run down’ - since the start of 2017 may have suggested some rise in the levels of financial pressure, constraints or merely greater financial caution.
“But the broad deterioration from start to finish in 2017 was only a small one at worst,” he said.
The top category was “value adding home upgrades”, which improved mildly to 25.5percent in the fourth quarter from 25percent in the previous quarter but was slightly lower than the 26 percent registered in the first quarter.
The percentage of homeowners “fully maintaining their homes and making some improvements” declined to 30.5percent in the fourth quarter from 36.5percent in the first two quarters of the year.