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“Oldies” – single-most important driver of home sales

Posted By Marilynh / February 10, 2015 / / 0 Comments

The 4th quarter FNB Estate Agent Survey pertaining to the selling side of the residential market shows a very strong situation, with South Africa’s growing contingent of “oldies” continuing to be the single-most important driver of home sales, as they downscale due to “life stage”.

In the FNB Estate Agent Survey, one of the questions asked of survey respondents is to provide an indication as to the key reasons for selling properties. 8 categories of reasons for selling primary residential properties are provided. They are “Downscaling due to financial pressure”, “Downscaling with Life Stage”, “Emigrating”, “Relocating to Elsewhere in SA”, Upgrading”, “Moving for Safety and Security Reasons”, “Change in Family Structure”(Death, Divorce, etc)”, and “Moving to be Closer to Amenities”

The single largest percentage of sellers, i.e. 23% is still believed to fall into the category “Downscaling due to Life Stage” as at the 4th Quarter 2014 survey. This form of downscaling refers to those sellers who desire a smaller home, usually either because they are getting older or because their offspring have left home.

This estimated percentage of 23% is slightly lower than the multi-year peak of 26% earlier in 2014, but remains near “record” highs”, and far above the low of 12% reached back in the 2nd quarter of 2008 in far weaker market times.

We believe this “ageing” group of sellers to be “pro-cyclical” in their behaviour. They are not by-and-large financially stressed, and can thus wait for a “good time” to sell their property. They tend to come out of the woodwork in better market times. Therefore, the currently high percentage of these sellers, continues to be reflective of a relatively strong market.

However, as mentioned in previous reports, this high percentage also has partly to do with South Africa’s ageing population, especially in the middle and upper income groups, with the fastest growing age cohorts being in their 50s and 60s.  As these middle and upper income groups head down the “ageing population path”, they take advantage of a relatively good period in the property market to offload their properties.

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