The percentage of sellers having to drop their asking price to finalize the sale increased still further from 87 percent in Q2 2011 to 91 percent in Q3 2011.
The third quarter report confirmed that there was slightly better residential property demand. However, the agents did not indicate an improvement in the balance of demand relative to supply, which would suggest that property price growth is set to remain stagnant.
John Loos, FNB Home Loans property strategist say the property industry remains tense. At least 23 percent of estate agents cited economic burden and general pessimism as key factors influencing their near term expectations.
“We believe that while the estate agent survey demand is mildly encouraging, not too much should be read into it yet,” says Loos. Loos explains that the report also indicates a drop in the percentage of sellers selling their homes in order to downscale due to the financial situation.
Cape Town in 2011 is clearly a buyer’s market. Loos says the average time that a property remains on the market before being sold rose from 15 weeks and 1 day in Q2 to 17 weeks and 1 day in Q3 2011. The percentage of house owners having to decrease their asking price to finalize the sale rose still further from 87 percent in Q2 2011 to 91 percent in Q3 2011 and the average percentage drop increased from 11 percent in the previous quarter to 13 percent in the third quarter.
“We believe the financial pressure-related reason for selling is a strong source of support for the rental market.” He says a significant portion of these previous home owners probably move into the rental market for the time being as opposed to buying a cheaper home instantly. Estate agents taking part in the survey reported that 46 percent of sellers would be renting after the sale and 54 percent would buy again instantly.
The survey also demonstrates that another cause for selling is selling in order to upgrade. The percentage of sellers in this category declined from 16 percent in Q2 2011 to 15 percent in Q3 2011. The percentage of sellers selling in order to relocate elsewhere in South Africa remained unchanged at 7 percent, lower than the 8 percent from mid-2010 to early-2011.
The group of sellers dominating the residential property market is those selling to downscale to accommodate life stage. This group as a percentage of total sellers has increased to 23 percent, the highest percentage since the beginning of 2008. Estate agents reported a renewed increase in the number of serious viewers during show houses from 13.57 buyers to 15.05 buyers in the third quarter.
Demand appears to stay weak relative to supply, with the average time on the market having risen in the third quarter. Loos [explains|says] that one of the most [worrying|concerning] trends continues to be the estimated average time that a property is on the market prior to [being sold|changing owners].
“The average time has become more volatile from quarter to quarter since the market thinned during the 2008 recession.”