*This story first appeared in our latest Property360 Digital Magazine
Long-term change is washing through the lives of South Africans everywhere and shifting the foundations of what we call home.
People are downscaling, upscaling, relocating, and retiring and the reasons behind their moves are many.
Historically, most of those selling their homes downscale as a result of their life stage but, in these current times, downscaling because of financial pressure is fast becoming the most prominent reason for disposing of property.
Life-stage downscaling and financial pressure downscaling account for a total of 44% of property sales presently, says FNB senior economist Siphamandla Mkhwanazi, noting that the volume of sales because of financial pressure are the highest since 2011.
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“These are evident across all price buckets, but more so in the affordable segments.”
In the ‘under R750 000’ price band, sales because of financial pressure are estimated to have risen to around 30% following relatively severe labour market pressures with rising unemployment for this lower-income earners, says Mkhwanazi.
He acknowledges though, that many of the property disposals may also be because higher-income households are selling investment properties to alleviate financial pressures.
“There are also rising incidents of corporates disposing of property to alleviate cash flow and balance sheet pressures.”
Mkhwanazi adds: “Interestingly, the trend looks similar to the 2008 crisis, although at a noticeably lower level. If the trend continues to track 2008, we should expect more properties on market because of downscaling, and a peak between Q2 and Q3.”
While financial pressure is a stress for many homeowners, increasing numbers of properties in the R1.6 million to R2.6m price bracket are being sold as sellers of these properties look to upgrade.
“We suspect that this is driven by the changing housing needs brought about by the pandemic and remote working, and the less severe job losses among these higher income earners.”
In Bellville, Cape Town, those who are downscaling often move in with their adult children, into retirement homes, or into smaller townhouse or sectional title properties, says Morné Veer, franchisee of Rawson Properties Bellville. Most of the downscaling is undertaken by older people while younger families are upgrading.
Very few sellers are moving out of Cape Town though.
In the Durban’s City, Berea, and Sherwood areas, it is a different story, says Bradley Bougardt, franchisee of Rawson Properties in these areas.
“Most people are selling their homes because of financial pressures such as job losses or failing businesses. These factors are influencing all price ranges.”
While some sellers are however, finding “great value” when buying new homes in their respective price ranges, more often than not they are entering the rental market or moving into shared accommodation or with their families. Most of those who move to renting are doing so temporarily as they recognise that property is a stable investment, and they will buy again at some point.
“There is a huge shortage of jobs and business is in a wait-and-see situation for the most part.”
Of the sellers who are relocating, Bougardt says there is a growing trend towards their moving to Gauteng for job opportunities or being transferred there.
He adds: “Very few buyers are upscaling at the moment but those who are seem to be upscaling within relatively close proximity to where they currently live.”
In Bryanston, Johannesburg, most sellers make the decision to sell for reasons of affordability and relocation, says Roberta Lee Dessington, sales and rental partner at Rawson Properties in the area. These reasons are seen throughout the various price brackets.
Sellers who are upscaling are doing so for more space due to home schooling their children or working from home.
“Those who are downscaling are moving into smaller homes close by, either rental properties to live in in the interim or moving in their families...They are not buying locally unless they are moving provinces.”
Some sellers are renting with a view to emigrate, while others are renting until there is more certainty about the future.
“They have sold their biggest asset and are able to make quicker decisions if needed.”
Mkhwanazi says total emigration sales continued to pull back from the recent peak of approximately 18% in Q4 2019 to 11% in Q4 2020. In the higher-priced segments though – particularly the R2.6m to R3.6m bands, these sales have started rising. This could also be a result of delayed decisions because of travel restrictions throughout the year.
The Rawson agents say that buyers include middle-aged buyers, young couples, and families looking for bigger homes.
“There are also quite a few speculative buyers around as tougher times will produce better value for the savvy buying market,” Veer adds.