Every quarter FNB published an
exceptionally detailed estate agent survey, which provides a remarkably
accurate assessment of the property market and provides interesting statistics
to support the collective views of South Africa’s estate agents. The recently
published second quarter report does indicate a marginal softening in
residential activity, which can be attributed to seasonal factors. Buying a
home in Cape Town or Gauteng is just not the same in winter, but for us in KZN
it hardly makes a difference.
The home buying confidence indicator is a measure
of how estate agents see the short term (next quarter). Currently expectations
are down from the first quarter but on the whole the majority expect buying
activity to remain stable. The three most significant factors that impact on
these expectations are seasonality, stock issues and pricing/affordability.
Being part of a large national estate agency we get to understand first hand
what the Gauteng and Cape based offices regard as market constraints and these
are often very different to what we have experienced along the North Coast.
Whereas the shortage of available stock is something an estate agent in Cape
Town or Sandton has had to deal with, we have had a complete oversupply of
available properties for the past few years. Only in our local rental market is
the stock issue a major limitation. Certain price brackets of properties – such
as freehold homes priced at R2m within a secure gated estate such as Palm
Lakes, are beginning to experience supply constraints and pricing of these
options have been edging upwards.
Pricing of high-end properties remained
stubbornly high for several years, but so far this year we have seen a downward
adjustment of seller’s expectations and a few notable properties in the price
bracket between R10m and R20m have traded. The emerging stock shortages have
not as yet been able to reduce the average speed at which property sales are
taking place. The estimated time that a property remains on the market prior to
selling is a good gauge of the balance between demand and supply at the
prevailing price levels. The second quarter 2013 national measurement is 17
weeks and 1 day. Since 2011 this statistic has moved sideways, fluctuating
between 15 and 17 weeks. This is very different from the 8-week average
experienced during the 2005/6 periods. As soon as you analyze the higher end
price brackets, the time on the market rises significantly. It is not unusual
for a R20m Zimbali home to be on the market for over 2 years. The percentage of
properties sold at less than their asking price is instructive in terms of the
level of pricing realism in the market. The second quarter figure was recorded
at 90%, up from the 89% recorded in the first quarter, which is the highest it
has been since 2004 when just over 30% of properties traded at less than their
asking price. The average drop in price to secure a sale has remained at 10%
for the past five quarters.
(Author: Andreas Wassenaar, published in The Bugle, 31 July 2013)
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