Weak domestic confidence suggests slowdown in demand for secondary property
Although, to date, strong signs of secondary demand slowing has not been observed, the FNB Estate Agent Survey Q2 2017 suggest some slowing in this non-essential form of home buying.
In the 2nd quarter 2017 survey, the agents surveyed estimated a secondary property buying percentage of 12.82%, down from the 14.47% estimate for the 1st quarter Estate Agent Survey. However, quarter to quarter the estimates can fluctuate, and one quarter of decline after the prior quarter’s rise doesn’t reflect any trend yet.
One feature that has stood out in the survey of secondary and primary home buying motives, is that it is arguably the purchase of properties for primary residence use by another family member that gets “shelved” the quickest in more constrained financial times, the estimated level of buying for this purpose slowed to a mere 0.49% of total home buying.
Secondary home buying for holiday home purposes also receded in Q2 2017, from 3.77% of total buying in the previous quarter to 2.55%. However, prior to Q1 2017, this category of buying had seen a rising trend through 2016. It is thus too early to conclude a weakening trend.
The third category of secondary home buying may not have shown any signs of decline yet, but agents are becoming less optimistic about activity in the buy-to-let market. This mild decrease in buy-to-Let optimism amongst agents may relate to the perception of “Economic Stress/General Pessimism” amongst a sharply increasing percentage of agents.
Although the 2nd quarter Estate Agent Survey saw a decline in the estimated secondary property buying percentage, we would not yet draw any conclusions regarding a declining trend. However, within this category of home buying, the sub-category of “buying a home for use as a primary residence by a family member” appears to have already formed a noticeably declining trend. But, in these times of weak domestic confidence, some near term decline in overall secondary home buying can be expected.