Unemployment, interest rate increases, and rising living costs will see many homeowners giving up their homes this year.
Some will be forced to downscale while others will find themselves in the rental market or moving back home.
At one end of the ‘reasons for selling’ scale, says Andrea Tucker, director of MortgageMe, are financial pressures on households from job losses and higher-than-anticipated living costs as a result of inflation. As a result, individuals and families are looking to consolidate their spending and reduce overheads by downsizing their homes if this makes financial sense for them in the short and medium term.
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In 2022, inflation became a challenge, almost overnight, says Tony Clarke, managing director of the Rawson Property Group. To minimise the fallout, the Reserve Bank was forced to implement a much steeper interest rate increase than had been forecast.
“This, together with rising costs of living, put a dent in buyer affordability.”
As a result, he says the property market saw buyer activity slowing, alongside an increase in distressed sales and downscaling.
“This imbalance in supply and demand led to sluggish property price growth, with inland provinces facing additional pressure from ongoing semigration trends to coastal areas.”
Clarke expects these trends to continue into 2023, with nominal price growth remaining positive, but subdued for some time to come.
Talks of downscaling remains firmly on the cards – particularly among middle income earners, agrees Grant Smee, managing director of Only Realty Property Group.
“Many South Africans capitalised on low interest rates by upscaling and renovating their homes over the past few years. However, the sharp increase in the interest rate has many wondering whether to scale back and cut their losses.
“Rising costs places immense pressure on consumers and will have many relooking their financial position in 2023.”
He does, however, caution homeowners to do the math prior to selling.
“Having a knee-jerk reaction can cost you more in the long-term, so it’s important that you look at all the options available to you prior to making your final decision.”
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