John Loos on your clients’ appetite for secondary home buying
“Second home buying takes a back seat in tough economic times.”
In the 3rd Quarter 2017 FNB Estate Agent Survey, the demand percentage for 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.
Indeed, this continues to be the case.
Secondary home buying doesn’t appear to have fallen through the floor, but the FNB Estate Agent Survey does point to recent quarters’ estimates showing some decline in such buying as a percentage of total home buying.
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 1st quarter of 2017 – the highest estimated percentage since the end of 2009. Since then, this estimate has declined mildly to 12.48% by the 3rd quarter of 2017. 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 3rd quarter of 2017, exceeded only once since 2014 and that was in the 1st quarter of 2017 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.
By John Loos, Household and Property Sector Strategist for FNB