The picture emanating from a sample of estate agents surveyed by FNB in the second quarter of 2016, is that now may not be the best time to sell your house in South Africa.
FNB’s data shows at least three compelling reasons why riding out this difficult economic period may be more beneficial for those looking to offload their homes for a profit:
- The estimated average time of properties on the market showed a noticeable increase;
- Agents reported a rise in the percentage of sellers having to drop their asking price;
- The average estimated number of viewers per show house decline.
“It is important to understand that, due to significant resistance by home sellers to house price declines, in times of economic and residential demand slowdown the residential market often moves away from market equilibrium price,” said property sector strategist at FNB, John Loos.
FNB ‘s estate agent survey revealed the following:
- Average estimated number of viewers per show house declined to 9.64 in the 2nd Quarter of 2016, down from 11.6 in the prior quarter, and below the 11.05 estimate for the corresponding quarter a year ago. The cumulative decline in recent years has become considerable, from a high of 16.69 estimated in the 2nd quarter of 2013.
- The percentage of agents citing stock constraints as a factor in shaping their near term expectations declined to 10.7%, from 17.3% in the previous quarter. This is significantly down from the 24% high reached in the 1st quarter of 2015.
- The estimated average time of properties on the market showed a noticeable increase from a previous quarter’s 11 weeks and 1 day, to 13 weeks and 4 days.
- Agents reported a rise in the percentage of sellers having to drop their asking price, from 88% in the previous quarter to 92% in the 2nd quarter of 2016. This is noticeably higher than the 78% recorded back in the 2nd quarter of 2014.
- The estimated average percentage asking price drop, on those properties where a price drop is required to make the sale, was -9%, slightly more than the -8% of the previous quarter, but unchanged from the 2nd quarter of a year ago.
- Agent perceptions of housing affordability have deteriorated mildly further, with as many as 31% saying that “income levels have got far behind house prices”. This is compared to 11% back in the 3rd quarter of 2014.
Loos said that the move is not sufficient to draw conclusions regarding a trend away from market equilibrium.
“However, after 2 years of broad slowing in demand, as reflected in a declining average number of show house viewers, and a slowing percentage of agents citing stock constraints as a factor in their lives, the broader evidence does suggest that such a shift away from market equilibrium is possibly at hand in the near term.”