Growing older

In spite of a falling life expectancy – due mainly to the HIV/Aids pandemic – South Africa is in the early stages of the global ageing population trend. Demographics from IHSGlobalinsight show that the age band 0-4 years is less than the bands just above it. The 20-29 year-old age bands grew by 17,2% over the 10 years 199-2008 while by comparison the 65+ age group grew by a much more rapid 28% over the period.

The trend has far-reaching implications for the housing market where current focus tends to be on the young first-time buyer segment. More research is needed into the housing pattern of retirees. Do they sell their homes and downscale, or retain them for their children to inherit? Can they afford to remain in the family home? Consider that living on a fixed income can be a one-way ticket. With inflation at 6% the cost of living doubles in 12 years.
Some countries have “equity release” programmes through which financial institutions “purchase” homes owned by elderly couples, paying them lump sums to help with living expenses, but allowing them to remain in occupation, rolling over the interest until such time as one or both pass on. The problem is that “equity release” only works well when property prices are rising and interest rates are low. In South Africa, Nedbank introduced a similar scheme without any real success.

In the UK, where there is a national old age pension, the ageing population syndrome has forced the government to increase the pensionable age for men from 65 to 70 years and for women from 55 to 60 years.
FNB’s property strategist John Loos says that such demographic changes, along with affordability issues, have led to an increasing need for more smaller sized residential units.