There is no doubt the market is under pressure. Expendable income for consumers seem to be diminishing and the overall economic climate, interest rates and ratings agencies downgrades are filtering through to the man on the street.
Despite the doom and gloom outlook FNB’s latest property barometer on residential maintenance and downgrades explains that there is only a slight weakening levels of home maintenance and downgrades.
The FNB Estate Agent Survey has recorded a very mild weakening in agent perceptions of home maintenance and upgrades in the 2nd quarter of 2017, after a brief prior 2-quarter strengthening.
This is not surprising as recessionary conditions were imminently going to influence this sector of the market. As I’ve explained in the past investing in a home is a long term commitment but home maintenance is an area subject to short term economic fluctuations.
This weakening might reflect less on home investor confidence and more on retail price increases. Home-owners investing in upgrades on their home are to a large extent reliant on affordability. In our experience most home-owners know that upgrading their home will add value to the property and often a very good return on investment decision.
Yet, households are less likely to spend, as budgets are tightening during this economic cycle. What then happens is that any expenses seen as unnecessary over the short to medium term are not a priority, this sort of activity spills over to upgrades and maintenance.
It is difficult to predict what is going to happen over the next two quarters. There are a lot of variables influencing our macro- and micro economic conditions, and whilst consumer confidence continues to remain under pressure this cycles term is uncertain.