Sellers believed to be selling homes in order to downscale due to life stage are proving to be a key driver of housing trade. This is according to John Loos, FNB’s household and property sector strategist, citing the 3rd Quarter 2017 FNB Estate Agent Survey which revealed that this age group was the largest single group of home sellers in Q3 2017.
“It may sound strange to some to hear that the ageing part of the homeowner market could be a key driver of growth and stability in the market, but in tougher economic times these older groups appear to be less affected by the ‘negatives’ than the less financially strong younger age groups,” said Loos. “The 3rd quarter 2017 survey recorded 26% of all home buyers estimated to be those selling to downscale due to life stage. This is the largest percentage of all our major categories of reasons for selling, the next highest percentages being those selling ‘in order to downscale due to financial pressure’ and those ‘selling due to a change in family structure (e.g. divorce)’, both of these estimated at 14% of total selling.”
Deeds office data, however, pegs buying transactions by individuals aged 50 years and older at 33.06% of total buying activity by August of 2017, with the pace of increase through 2016 and 2017 appearing to have picked up.
“This heightened level of older age group buying in recent years seems entirely understandable, given that aspirant first-time buyers have less financial reserves built up, are more heavily reliant on credit and high loan-to-value ratios to fund property purchases, and are thus more likely to postpone their homeowner market entry when economic times appear less certain and job security is lower,” said Loos.