Slowdown in buying of second homes

IN THIS year’s third quarter FNB Estate Agent Survey , the demand percentage for a secondary home was mildly lower than in the previous quarter, representing the second successive quarter of decline.

Perhaps it is to be expected that in these tougher economic times, secondary home buying overall would be placed on the backburner by many, given its non-essential nature, and that the levels of such home buying would be mediocre at best.

According to the FNB Estate Agent Survey, secondary residential property buying reached a multi-year high of 14.47% of total home buying back in the first quarter of this year – the highest estimated percentage since the end of 2009.

Since then, this estimate has declined mildly to 12.48% by the third quarter of this year. These levels remain far below the pre-2008 boom time levels, which exceeded 20% at times.

Interestingly, the estimated holiday home buying percentage has not yet shown a noticeable decline. This category of buying was estimated at 3.3% of total home buying in the third quarter of this year, exceeded only once since 2014, and that was in the first quarter of this year, where it measured 3.77%.

We would however expect holiday home buying to recede in the near term.

Although two quarters do not yet constitute a confirmed trend, we would expect to see some decline in these current times of very weak household sector and consumer confidence, times which usually lead to a greater level of financial caution. We have noticed that there is still a demand for homes that are well priced and in the best positions. There are sectors of the market where we cannot find enough of the right sort of home.

This article is based on an article written by John Loos, Household and Property Sector Strategist for FNB, and contains extracts from that article.

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