The percentage of properties sold at less than asking price was 85 percent in Q4 2012 according to the survey, and this rose to 89 percent in Q1 2013.
Estate agents point to increased demand and stock constraints, but not necessarily improved price realism.
The report reveals that coupled with a mild recovery in economic growth, it may be that in recent times, buyer confidence is being seen in the property market due to low interest rates.
Writing in the report, FNB household and property sector strategist John Loos and Theo Swanepoel, property analyst at FNB Asset Finance explain that people tend to be more influenced by recent events (as opposed to those further into the past) when formulating a perception of their risk, in what is known as ?recency bias?.
?The recession and 2008 interest rate peak are probably fading in the memories as time goes by, causing a perception of diminished risk,? according to the report writers.
According to the report, the demand activity rating reached 8.6 percent year-on-year (y/y) in Q1 2013 from 4.1 percent y/y in Q4 2012.
Loos and Swanepoel say on a quarter-on-quarter seasonally-adjusted basis, Q4 2012 recorded negative growth (decline) of ?2.9 percent, after the two prior quarters? positive growth rates, and then a significant increase of 4.3 percent in the first quarter of 2013.
While demand is strengthening, estate agents report that supply is constrained with 23 percent citing stock constraints in Q1 2013 from 13 percent in Q4 2012. Simplistically, one would expect this growing supply constraint to cause a renewed decline in average time on the market, and with it stronger house price growth, in the coming quarters should solid demand levels be sustained, they say.
According to the report, the lagged impact of Q4 2012 decline in the demand rating may have been a first quarter 2013 deterioration in indicators of price realism.
From a fourth quarter estimate of 15 weeks and 4 days, the average time on the market rose in Q1 2013 to 17 weeks and 2 days.
In addition to this, an overwhelming majority have to drop their asking price to sell.
The percentage of properties sold at less than asking price was 85 percent in Q4 2012 according to the survey, and this rose to 89 percent in Q1 2013. The average drop has remained stable for the past four quarters at an estimated -10 percent. ?Therefore, after some hint of improving pricing realism by sellers in the second half of 2012, the first quarter of 2013 survey once again suggests that perhaps we are not there yet.
?It is possible that seller optimism increases as demand is perceived to be improving, and that in turn keeps prices ahead of demand,? say Loos and Swanepoel.
Sellers may also perceive themselves to be increasingly in the pound seats and agents have to compete harder to secure mandates on increasingly scarce stock, according to the report.
Despite all of this, estate agents remain upbeat about the residential property market with 65 percent saying they expect demand to remain the same in the next three months, while 30 percent expect an improvement and only 5 percent expect a decrease in activity.
Stock constraints became the single-most important issue cited by agents when providing factors influencing their expectations of near term future activity, according to the report.
While stock constraints are not necessarily positive for agents, whose income is determined largely on turnover of stock, it could be positive from a house price growth point of view in the near future, as it suggests an improved balance between demand and supply, they add. ? Denise Mhlanga