Financial pressure: 25% of sellers forced to give up their homes – here’s how you can hang on to yours

Making certain adjustments can help you keep your home. Picture: Karolina Grabowska/Pexels

Making certain adjustments can help you keep your home. Picture: Karolina Grabowska/Pexels

Published Nov 4, 2023


Financial pressure-induced property sales remain elevated in South Africa, with almost a quarter of all sellers giving up their homes because they can no longer afford them.

FNB data for Q3 2023 shows that 23 percent of homes put on the market are due to financial pressure, a figure that is relatively unchanged from the previous quarter.

While this may be viewed as a bit of a positive – because the numbers are not growing – this level is still higher than the historical average of 18 percent since the end of 2007.

As expected, senior FNB economist Siphamandla Mkhwanazi says these sales are disproportionately higher in the affordable market segment, with an estimated 30 percent of sales attributed to financial pressure.

“This reflects the impact of the sharp increase in debt servicing costs, which should have a more pronounced impact on lower-income households.”

The data shows these to be the percentages of sales due to financial pressure per price bracket:

– Under R250,000: 26.5 percent

– R250,000 to R500,000: 29.8 percent

– R500,000 to R750,000: 33.3 percent

R750,000 to R1,6m: 21.1 percent

– R1,6m to R2,6m: 23.5 percent

– R2,6m to R3,6m: 17.5 percent

Above R3,6m: 17.4 percent

While aspiring owners are encouraged to purchase while interest rates are high, homeowners who bought when the interest rates were low and are now struggling to pay their home loans can make some adjustments to better navigate the new market realities, says Samuel Seeff, chairman of the Seeff Property Group.

He offers these tips:

1. Cut down your expenses

Start by reviewing your budget and making adjustments. Look at where you can cut by cancelling unnecessary subscriptions and shopping around for cheaper insurance premiums.

2. Focus on reducing your debts

Financial planners suggest paying a little extra every month on your debts, or focus on reducing high-interest debts such as credit and store cards first. This will free up cash to further reduce your debt. Do not make further debt, rather cut back on your living costs.

3. Access surplus funds in your mortgage loan

If you have an access bond, you could access any surplus funds that you have accumulated to pay off some debts. You could also refinance your home loan. This will require a new bond to be registered which will be based on the latest value of your property.

4. Arrange new payment plans

Debt counsellors suggest that you do not wait because it will just get worse. Rather contact the lender or retail store to make new arrangements. You should aim to avoid bad debts and a negative impact on your credit score.

5. Communicate with your home loan provider

Your home is important so avoid financial distress on your home loan by immediately contacting your mortgage bank if you are battling to keep up with the repayments. This may allow you to make alternative arrangements.

Other options for homeowners battling to keep up with their bond repayments

If you are selling for urgent financial reasons, Seeff says you should be upfront with the agent so they can assist you in the best way possible. You could also consider downgrading your property.

“There are many options. You may be at a life stage where you could downgrade your home and benefit from an easier lifestyle and added cash by going smaller.”

Meanwhile, Mkhwanazi says property sales attributed to relocation within South Africa appear to be plateauing, from 14 percent in Q3 2022 to 12 percent in Q3 2023 to 12% in 3Q23. This follows an increase from eight percent in Q1 2020.

Property sales for reasons of upgrading have “slowed considerably” since the beginning of the interest rate tightening cycle, from 15 percent in Q4 2021 to nine percent in Q3 2023.

“Emigration-related sales were steady at nine percent, significantly lower than the peak of 18 percent observed in 2019. However, these remain elevated in higher-priced segments, particularly the R3,6m+ bracket.”

The 35 to 44 age group makes up 63 percent of South Africans believed to be selling their homes in order to emigrate.

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