South African estate agents report a slightly weaker activity in the residential property market as revealed in the FNB Estate Agent Survey Q4 2012.
The percentage of properties sold at less than asking price was 85 percent in Q4 2012, according to the survey, which was insignificantly different from 87 percent in Q2 2012 and 84 percent in Q3 2012.
According to the report, although the percentage of sellers selling in order to downscale due to financial pressure was down to 18 percent from 20 percent in Q3 2012, the level remains high as many households are still over indebted.
Interestingly, the percentage of sellers selling in order to upgrade declined mildly from 16 percent of total sellers in the Q3 2012 to 14 percent in Q4 2012.
These two reasons for selling are arguably the two most important indicators in the survey of financial pressure/constraints experienced by homeowners, says John Loos, FNB household and property strategist.
Loos explains that the gap between the two has closed significantly since early-2009, a positive development, but the level of downscaling due to financial pressure remains high, reflecting a still-fragile household sector financial situation.
Average selling time and pricing
According to the report, the average time it takes for a property to sell declined slightly from the previous quarter’s 15 weeks and 6 days to 15 weeks and 4 days, 2 weeks lower than the second quarter’s 17 weeks and 4 days.
For 2012 as a whole, the average time on the market was 16 weeks, a little better (lower) than the 17 weeks and 0.25 days average in 2011.
However, 15 weeks and 4 days by year end remained too long to represent a strong market, says Loos.
“Judging from the healthier market days prior to 2008, a level nearer to 8 weeks (2 months) on the market appears to be the benchmark for a “strong” market, so there remains some way to go.”
The report points to 13 percent of estate agents citing stock constraints as being an issue in the residential market, up from the 5 percent peak in Q3 2012 and very much in line with the year 2012’s average of 11.75 percent of agents citing stock constraints.
Loos notes that this is well-above the 6.5 percent average for 2011.
Some sellers still have to drop their asking price in order to close a deal although many sellers are now pricing their properties in line with the market.
The percentage of properties sold at less than asking price was 85 percent in Q4 2012, according to the survey, which was insignificantly different from 87 percent in Q2 2012 and 84 percent in Q3 2012.
Loos says the average drop has moderated mildly from -13 percent in the second half of 2011 to -10 percent by Q2 2012, where it remained in the last two quarters of 2012.
He adds that the smoothed trendline regarding percentage of sellers dropping their price does show some very slight decline since 2011, once again pointing to a slightly more realistic market when read along with the moderate decline in average time on the market and a smaller average percentage drop. – Denise Mhlanga