More South Africans are being forced to sell their homes as high interest rates and rising living costs make it impossible to keep hanging on.
In the last quarter of 2023, almost 25 percent of homes listed for sale were due to financial pressure; this means that one in four properties with ‘for sale’ signs outside their doors has distressed families or individuals living under their roofs.
To put this into perspective, the historical average since the end of 2007 is 18 percent.
As concerning as this figure is, FNB senior economist Siphamandla Mkhwanazi says financial pressure-induced sales are even higher in the affordable market where one-third of volume sales are thought to be for this reason.
“This is consistent with the sharp increase in living and debt servicing costs, which should have a more pronounced impact on lower-income households.”
FNB Property Barometer data for Q4:2023 reveals that a staggering 53.6 percent of sellers of homes in the R250,000 to R500,000 value bracket were giving them up because they could no longer afford them. This is a massive jump from the 29.8 percent in the previous quarter.
This is the breakdown of sellers in each price bracket who were forced to sell for financial reasons in Q4 compared to the previous quarter:
< R250,000
– 27 percent (from 26.5 percent)
R250,000 to R500,000
– 53.6 percent (from 29.8 percent)
R500,000 to R750,000
– 32.6 percent (from 33.3 percent)
R750,000 to R1.6m
– 24.9 percent (from 21.1 percent)
R1.6m to R2.6m
– 21.1 percent (from 23.5 percent)
R2.6m to R3.6m
– 19.8 percent (from 17.5 percent)
> R3.6m
– 19.2 percent (from 17.4 percent)
Overall
– 24.7 percent (from 22.8 percent)
Mkhwanazi says sales attributed to relocation within South Africa (semigration) have continued to normalise and are estimated at 11 percent of volume sales. This is compared to 12 percent previously and a peak of 14 percent in Q3:2022.
“Incidents of upgrading have also slowed considerably since the beginning of the tightening cycle, from 15 percent in Q4:2021 to 10 percent in Q4:2023.”
Emigration-related sales in the last quarter of 2023 were “steady” at eight percent, he says, adding that this is “significantly lower” than the peak of 18 percent observed in 2019 but in line with the long-term average since the end of 2007.
The FNB data shows these to be the selling reasons in the last three months of last year compared to the previous quarter:
Downscaling with life stage (retirement)
– 21.4 percent (from 22.34 percent)
Emigrating
– 8.2 percent (from 9.1 percent)
Semigrating
– 10.9 percent (from 11.68 percent)
Upgrading
– 10.1 percent (from 8.52 percent)
Moving for safety and security reasons
– 7.3 percent (from 7.24 percent)
Change in family structure
– 10.8 percent (from 11.74 percent)
Moving to be closer to work or amenities
– 6.7 percent (from 6.61 percent)
Homeowners are bracing themselves for this week’s Monetary Policy Committee meeting where the first repo rate decision of 2024 will be made. While there is widespread hope that the rate will decrease, experts expect that it will hold steady at 8.25 percent. This will keep the interest rate at 11.75 percent.
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