Current conditions have made it more difficult for middle class homeowners to upgrade their home
There is, says Bill Rawson, Chairman of Rawson Properties, growing evidence that the difficult conditions over the last 24 months in the residential property sector have led to middle class South Africans holding on to their homes longer and being unable to upgrade as they did formerly.
Our experience in the Rawson Group does not tie up with that of the Lifestyle Risk Research Group who have recently been reported as saying that middle class South Africans now change homes only every 12 to 13 years.
We would, however, agree that they are not moving as often as before: our estimate is that they now sell and move on average every eight to nine years.
Previously, said Rawson, it had been accepted that middle class SA homeowners moved every six to seven years. Young upwardly mobile couples and single people had tended to change and upgrade their homes as often as every two or three years and in the boom period, 2001 to 2007, investors often balled out after one year.
Once the children of the family reached school going age, there was and still is a tendency for the family to stay put close to schools for ± ten years. Thereafter they might move as much as three times.
All these sell and move-on patterns have now changed, said Rawson. The National Credit Act, the relatively high cost of new buildings and the cutbacks in earnings have all caused people to move less often.
The NC Act, he said, has temporarily drastically reduced the number of bonds available in some areas by as much as 80%. This, in turn, has fostered dual living, renting and staying in one home longer.
Since 2008, said Rawson, building costs have risen by over 20%, making the cost of a new home expensive in comparison to a used or second hand home where the price in real terms might be 30% down on that of 2007.
Until these costs even out, many major new developments will be held back, again making changes in ownership less likely.
Five or six years ago the units in new developments were often better value than second hand homes, making a move a logical choice. That is no longer the case.
Asked how this might affect the estate agency world, Rawson said that previously typical Cape Peninsula suburbs might support four to six agents from rival firms for every 1 000 homes. Now, he said, the ratio is likely to be closer to four or five agents for every 2 000 homes.
As a result, we have seen a two thirds drop in the number of agents employed but this is now changing and the numbers are again moving slowly upwards.
Article by: www.rawsonproperties.com