Financial pressure is taking its toll on homeowners. Rising fuel costs, persistent food hikes and electricity and municipal rates increases have hit the consumer hard.
According to information provider Lightstone, “the number of homeowners being forced to sell properties they had only bought two years prior has jumped from 2% of total sales in May last year to 3.7% a year later.”
This is an increase of more than 80%.
According to Moneyweb’s report in Saturday Citizen, the house you were able to afford due to kinder interest rates in 2020 when Covid hit can now cost you up to R8 000 more a month on a R2.5 million bond.
Repayments on a R1 million property (fully bonded) would’ve increased from R7 753 to R10 837 a month. That’s a 40% jump.
As interest rates keep climbing, more homeowners are being forced to sell properties.
The harsh cost of living makes it clear why 30% of sales in the affordable property market are attributed to financial pressure.
Lightstone said the “low interest rates from mid-2020 to end 2021 created an opportunity for new buyers to enter the market, or for existing homeowners to buy up – but it also created the possibility of too many buyers overstretching themselves”.
They added: “Lightstone looked at how many buyers were selling properties within two years to measure the level of ‘distressed sales’ and compared May 2022 with May 2023 – and found that 80% more of those who bought in the middle of the low interest period, May 2021, were sellers by May 2023.”
Lightstone measured “property sales volumes, the number of properties bonded and the number of sales within two years of purchase, to determine whether the number of distressed sales [is] rising or not”.
As we feel the pinch all we can do is tighten our belts further, but the worrying thing is most households have run out of places to save.
Something has to give…
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