FNB: 'Oldies' drive housing supply
Johannesburg - Downscaling due to "life stage" is
emerging as a major driver in residential property supply at present,
according to the third-quarter FNB Estate Agent Survey.
John Loos, property market strategist at FNB Home Loans, said this referred mostly to households where the children had grown
up and left home, as well as to ageing home owners for whom a
large house may no longer be "practical".
"When we started questioning agents as to the reasons that
people were selling homes, back at the beginning of 2008, they estimated
that 14% were doing so in order to downscale due to 'life stage'. Since
then, this reason for selling has steadily risen, reaching its highest
level yet of 23% in the third quarter of 2011."
As the survey was only initiated in 2008, it doesn't provide much insight into whether the growth is cyclical or not.
However, Loos said it was conceivable that these
households were holding back on selling in 2008 due to the extremely
weak nature of the market at that stage, with a recession in play as
well as high interest rates at the time.
One would think that such
sellers, many of whom were in no hurry to sell, may have bided their
time until the market strengthened, and perhaps they were now coming out
of the proverbial woodwork in greater numbers due to property times
being a little better compared with 2008.
However, one would expect sellers that sell for many other
reasons - barring those doing so because of financial pressure - to also
possibly hold back on selling until market conditions improve, so as a
percentage of total selling it isn't clear that the short-term property
cycle fully explains the rising percentage of "life stage sellers".
A few other factors should be considered, according to Loos.
Two important ones are an ageing population - especially the middle and
upper income sections that drive the formal property market - along with
sharply rising housing costs.
Indeed, HIS Global Insight estimates of population by age
cohorts or groupings point to the 60- to 64-year-old age group as having been the fastest
growth group over the past five years, growing by 22.2% cumulatively
from 2006 to 2010.
The 50- to 59-year-olds on 19.7% and 50- to 54-year-olds with
18.6% growth were not far behind. The 50 and above age groups are only about 27.5% of the total above-20 population. But the
steadily growing percentage of "life stage downscaling" may be
reflective of these cohorts being the fastest-growing groupings in SA.
"The second major possible contributor is the steadily rising
costs related to housing, and by this we mean municipal rates and
utilities tariffs. As at August 2011, the overall consumer price
inflation rate was 5.3%." Loos said that by comparison, the CPI for housing was rising by a higher 6.8% year-on-year.
Loos said that the combination of faster-growing over-50 age
cohorts in SA relative to younger groups, along with more recent
sharply rising home-related rates and utilities tariffs, was believed to
be a key contributing factor to a rise in the estimated percentage of owners selling in order to "downscale due to life stage".