Johannesburg - Financial pressure downscaling is
on the decrease indicating a possible improvement in the management of
debt to disposable income, according to FNB's Estate Agent Survey.
John Loos, property strategist at FNB Home Loans, said estate agents estimated a decline in the percentage of owners selling
their homes in order to downscale due to financial pressure, from 25% in
the previous quarter to 19%.
He said that this could be the start of results from the long
process of household debt-to-income reduction, and other measures aimed
at rebuilding balance sheets, coming through.
"It is too early to tell though, and another few data points
will be required. But we do know from Sarb (South African Reserve Bank)
data that the decline in the household debt-to-disposable income ratio,
and thus the debt-service ratio, continues."
The third-quarter survey, undertaken in August, points towards
a slight rise in residential demand, and some mild improvement in
estate agent confidence, but it's not a market with any strong
When asked to rate residential demand in their areas on a
scale of one to 10, the agent panel put the average estimate at 5.86,
which falls on the higher end of the "stable" activity range between 4 and 6. This demand reading is slightly up on the 5.61
level of the previous quarter, and is also 3.7% higher than the third-quarter 2010 reading.
"In the context of past changes, a 3.7% year-on-year increase is
very small, and could probably better be termed a 'stabilisation' in
Nevertheless, Loos said this slight improvement was
surprising as the third-quarter survey reading had always been weaker
than the second quarter reading since the inception of the FNB Estate
Also, this comes at a time when there had been no further interest
rate cutting since late 2010 and the economy had recently come under
"Yet while agents point to a slight demand improvement, they
do not indicate any further improvement in pricing realism, or otherwise
put in the balance between demand and supply."
The estimate average time that a house remains on the market
before being sold rose from 15 weeks and 1 day in the previous quarter
to 17 weeks and 1 day in the third quarter survey.
percentage of sellers having to drop their asking price to make the sale
rose still further from 87% previously to 91%, and the average percentage
drop increased from 11% to 13%.
"So, while agents point to a slightly better residential
demand, they don't indicate an improvement in the balance of demand
relative to supply, which would suggest that house price growth is set
to remain under pressure."
"We believe, therefore, that while the latest Estate Agent
Survey demand reading is mildly encouraging, not too much should be read
into it yet.
"Only after another few quarters' surveys will we be able
to see whether a sustainable 'market stabilisation' is setting in. In
this regard, much will depend on the future state of the global and