03 Apr 2013
The household sector priority in the post-recession years has been to return to full maintenance of homes, whereas value adding additions and alterations remain on the backburner, according to the FNB report on additions and upgrades.
Writing in the report, FNB household sector, consumer and property strategist John Loos says the estate agents surveyed point to a gradual improvement in the levels of home maintenance, but no perceived improvement in the low level of value adding upgrades.
Loos explains that agents estimate an average of 3 percent of homeowners fall into the category of letting their homes get run down, 10 percent only attending to basic maintenance, 38 percent fully maintaining their homes, 45 percent maintaining fully and making some improvements, and only 3 percent making value adding upgrades.
He says what is encouraging, especially from a bank's point of view where many homes provide security for home loans, is that since the 2008/9 recession they have seen a big decline in the percentage of homeowners in the second lowest level categories of “letting homes get rune down” and “only attending to basic maintenance”.
“Whereas the total estimate for these two categories combined was 38 percent as at the November 2008 survey, this had diminished to an estimated 13 percent of total homeowners by Q1 2013.”
Loos points out that the result has been that the overwhelming majority now find themselves in the “full maintenance” and “full maintenance with some improvements” categories.
For these two categories, the combined total percentage has risen from 49 percent in November 2008 to 73 percent in Q1 2013.
This improvement in levels of home maintenance after a particularly tight financial period in 2008 appears to have had a noticeable impact on real growth in retail sales for retailers of hardware, paint and glass products, which twice hit double-digit growth rates in 2011 after huge year-on-year declines through 2009 and even much of 2010, notes Loos.
He says what hasn’t yet happened, however, is any noticeable improvement in value adding upgrades to homes, which comprise an estimated 3 percent of homeowners in Q1 2013.
This percentage was as high as 23 percent in early-2008, but slumped as the recession hit later that year, and has never really recovered meaningfully.
“For the foreseeable future, however, it would appear that households will be predominantly focused on full maintenance of their homes, whereas value adding upgrades to homes continues to take a relative backseat compared to the pre-recession years,” says Loos.
He adds that this reflects a still-tight financial situation in the household sector. – Denise Mhlanga
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