Rising interest rates and a rising cost of living are compelling a growing number of South Africans to sell their homes, with nearly 25% of listed properties in the last quarter of 2023 attributed to financial pressures.
This indicates that one in four homes with 'for sale' signs is inhabited by distressed families or individuals facing economic challenges, surpassing the historical average of 18% since the end of 2007.
Notably, FNB senior economist Siphamandla Mkhwanazi highlights that the impact of financial pressure-induced sales is even more pronounced in the affordable housing market, where an estimated one-third of volume sales are driven by economic constraints.
This trend aligns with the sharp escalation in living and debt servicing costs, exerting a disproportionate impact on lower-income households.
The breakdown of forced sales across different price brackets in the last quarter of 2023, compared to the previous quarter, is as follows:
Below R250,000: 27% (up from 26.5%)
R250,000 to R500,000: 53.6% (up from 29.8%)
R500,000 to R750,000: 32.6% (down from 33.3%)
R750,000 to R1.6 million: 24.9% (up from 21.1%)
R1.6 million to R2.6 million: 21.1% (down from 23.5%)
R2.6 million to R3.6 million: 19.8% (up from 17.5%)
Above R3.6 million: 19.2% (up from 17.4%)
Overall: 24.7% (up from 22.8%)
Mkhwanazi notes that sales attributed to domestic relocation (semigration) have stabilised at around 11% of volume sales, compared to the previous 12% and a peak of 14% in Q3:2022.
Instances of home upgrades have slowed from 15% in Q4:2021 to 10% in Q4:2023, with emigration-related sales remaining steady at 8%, significantly lower than the 2019 peak of 18% but in line with the long-term average since the end of 2007.
The reasons for selling in the last quarter of 2023, compared to the previous quarter, are as follows:
Downscaling due to life stage (retirement): 21.4% (down from 22.34%)
Emigrating: 8.2% (down from 9.1%)
Semigrating: 10.9% (down from 11.68%)
Upgrading: 10.1% (up from 8.52%)
Moving for safety and security reasons: 7.3% (up from 7.24%)
Change in family structure: 10.8% (down from 11.74%)
Moving to be closer to work or amenities: 6.7% (up from 6.61%)
Homeowners are anticipating the upcoming Monetary Policy Committee meeting, where the first repo rate decision of 2024 will be determined.
While hopes are high for a rate decrease, experts anticipate that it will remain steady at 8.25%, maintaining the interest rate at 11.75%.
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