Reasons for Selling Residential Property (The Bugle)

What are the reasons provided by South African homeowners for selling their residential properties? This is an interesting question and the answers can assist us in understanding trends within a property market. The most comprehensive answer to this question is provided by FNB’s regular national estate agent survey, the results of which have been published recently. 

The eight main categories that this survey provides for to describe the reasons for selling and the percentage applicable for the second quarter of 2013, include: 1. Downscaling due to financial pressure (18%), 2. Downscaling with life stage (21%), 3. Emigrating (3%), 4. Relocating within SA (8%), 5. Upgrading (19%), 6. Moving for safety and security reasons (10%), 7. Change in family structure (12%) and 8. Moving closer to work or amenities (8%). The highest category of downscaling with life stage are sellers who are getting older and are therefore looking for something smaller with their children typically having left home. This gives some insight into the impact of an ageing middle and upper income group and how important this group of seller’s are to the overall market.  This should also be of interest to developers who are currently providing or planning to provide retirement living opportunities. The KZN north coast is somewhat limited at the moment with this type of product offering and we can expect to see new retirement living villages or residential opportunities coming to the market within the near future. 

The “downscaling due to financial pressure” reason remains significant but the general trend for this reason to sell has been downward, and at 18% is well off the peak of 34% in the second quarter of 2009. In addition, of these sellers the percentage who are looking to rent versus buy after selling has changed, with 60% now looking to re-buy and only 40% looking to rent. This is a big improvement from the second quarter of 2011 when 51% were looking to rent rather than buy again, and 49% were looking to buy again. 

The other key selling group are those looking to upgrade, currently estimated at 19%, which exceeds the percentage of sellers downscaling due to financial pressure. Since 2008 the “downscalers due to financial pressure” have consistently exceeded those sellers planning on upgrading and it is only in 2013 that this relative difference has been reversed. This provides further evidence of an improving property market. Emigration selling is always of interest and it has come down significantly from its peak of 20% in the third quarter of 2008 to its current level of 3%. The poor global economic conditions, especially in those countries which have been typical destinations for South African emigrants, have no doubt had an influence and it remains to be seen how emigration selling responds once economic activity and work prospects in those countries improve.

(Author: Andreas Wassenaar, published in The Bugle, 24th July 2013)