In the first quarter survey, seller price realism remains the same with a home on the market for an average time of 12 weeks and 5 days before being sold.
This is according to the first quarter 2015 FNB Estate Agent Home Buying Survey, which highlights a weak start to the SA economy in general, with economic policies and structural constraints hampering the ability to take advantage of positive global economic developments.
"Given residential property’s strong links to the economy, it should therefore not be surprising that a lack of growth in the economy should begin to be felt in the residential market, and indeed this may be starting to take place,
" say John Loos, household and property sector strategist at FNB Home Loans and Theo Swanepoel, property market analyst at FNB Asset Finance. "It is important to understand that we are not yet implying a 'weak' market, but rather a lack of further strengthening in a market that has become quite solid in recent years."
Signs of sideways movement are evident from key indicators such as the average time properties spend on the market, the number of sellers having to drop their asking price to make a sale as well as the percentage drop in price.
In the first quarter survey, seller price realism remains the same with a home on the market for an average time of 12 weeks and 5 days before being sold, down from the third quarter figure of 11 weeks and 4 days. This is still significantly lower than the 19 weeks and 1 day at the beginning of 2011.
There was also a slight percentage increase in sellers having to drop their asking price, from 81% in the fourth quarter of 2014 to 83% in the first quarter this year.
The estimated average percentage asking price drop in order to sell remained unchanged at -8% for the 5th consecutive quarter. This is still far lower than the estimated average percentage drop of -13% in late-2011.
Agents continue to highlight a lack of available stock to sell in their near-term expectations, with 35% citing "stock issues" as a factor driving their expectations, 24% experiencing "stock constraints" while only 11% said there was "ample stock".
The survey points to the percentage of agents mentioning "stock constraints", increasing from the previous quarter’s 19% to 24%, a percentage comparable with the 22% recorded in the second quarter of last year.
"However, while this percentage increased from quarter to quarter, it must be noted that the percentage of agents citing 'lots of stock available' also rose from quarter to quarter, from 2% to 11%, so it is not clear that the overall national stock constraint actually deteriorated."
According to the survey, agents remain optimistic with 33% expecting activity to increase in the next 3 months while 63% expected it to stay the same and only 3% expected a decrease. These percentages are slightly better than the previous quarter’s expectations.
The 1st Quarter Residential Activity Indicator rose to 6.73, from the previous quarter’s 6.61. "However, when one takes seasonal factors out through a statistical seasonal adjustment, we see that our seasonally-adjusted version of the Indicator declined quite noticeably, from 6.76 in the previous quarter, to 6.43 in the first quarter of 2015. Seasonal factors aside, therefore, we saw a noticeable quarter-to quarter weakening as 2015 began," say Loos and Swanepoel.
The agents in the survey still expect further activity level strengthening to come but they "don’t appear over-excited" about house price inflation over the next 12 months. The average expected house price increase of +4.8% remains perhaps surprisingly moderate, say Loos and Swanepoel, although slightly higher than the prior quarter’s 4.3%.