Home own­ers are cut­ting back

Financial Mail - Investors Monthly - - Opening Bell -

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.

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