Home owners are cutting back
Tough economic times have forced South African consumers to curb spending not only on nice-to-haves but also on basic home maintenance and upgrades.
A recent survey by FNB shows that the percentage of home owners who are investing in value-adding upgrades has dropped from 26% in the third quarter of last year to 22.5% in the second quarter of 2016.
FNB property strategist John Loos says the start of a decline in the level of costly upgrades makes sense considering the current almost recessionary economic conditions. Consumer confidence has taken a knock as people become increasingly concerned about the weak economic and unstable socio-political environment. More worrying, however, is that home owners seem to be neglecting the maintenance of their properties. The percentage of home owners spending money on basic maintenance (as opposed to upgrades) declined from a high of 37.5% in the third quarter of 2014 to 21% in the second quarter of 2016.
Loos says the decline suggests a rise in the levels of financial stress. He says the reduction in maintenance to preserve the value of properties is also evident in the recent sales figures of hardware, paint and glass retailers. Sales in this category grew by a mere 0.5% year on year for the three months to April 2016, a considerable slowdown from the 9.6% high recorded in April last year. However, Loos says current home maintenance and upgrades remain significantly higher than 2008-2009 recession levels.