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FIRST NATIONAL BANK home loans strategist John Loos says weakness seen in second quarter 2010 probably signals the start of a weakening trend in South Africa’s residential property market, reflecting signs of a slowing economy and interest rate stagnation. However, he says the SA Reserve Bank has a “nicely balanced interest rate stance” from a property point of view, giving significant relief to those with debt.
AVERAGE TIME INCREASES The average time a property is on the market has increased, with FNB strategist John Loos saying that showed “a lack of realism” among sellers. From 12 weeks and four days in the first quarter survey, the second quarter estate agent survey showed a large jump to an estimated 17 weeks and one day average time a home is on the market before being sold.
DROP IN SALES PRICE The second indicator of pricing realism is the estimated percentage of sellers being required to drop their asking price in order to make the sale. It rose from 76% in the first quarter to 81% in the second. FNB strategist John Loos says quarterly moves can be volatile, but levels around 80% are a far cry from the boom years when levels were 30% to 40%.
PRICES STILL RISING FNB strategist John Loos says the deterioration of “pricing realism” in the second quarter might start to have a negative effect on house price trends, not yet in the form of price deflation but rather in causing house price inflation to near its peak. The FNB June house price index rose 12,6% year-on-year. Loos says though that’s healthy the rate of acceleration has slowed.
FINANCIAL PRESSURE STILL ON FNB reports there’s been significant selling of houses to downscale due to financial pressure. While recent quarters saw a significant improvement (decline) in the percentage of sellers being people selling to downscale due to financial pressure – from the 34% peak in second quarter 2009 to 20% early in 2010 – the second quarter estimate stalled at 20%.
AVERAGE TIME INCREASES The average time a property is on the market has increased, with FNB strategist John Loos saying that showed “a lack of realism” among sellers. From 12 weeks and four days in the first quarter survey, the second quarter estate agent survey showed a large jump to an estimated 17 weeks and one day average time a home is on the market before being sold.
DROP IN SALES PRICE The second indicator of pricing realism is the estimated percentage of sellers being required to drop their asking price in order to make the sale. It rose from 76% in the first quarter to 81% in the second. FNB strategist John Loos says quarterly moves can be volatile, but levels around 80% are a far cry from the boom years when levels were 30% to 40%.
PRICES STILL RISING FNB strategist John Loos says the deterioration of “pricing realism” in the second quarter might start to have a negative effect on house price trends, not yet in the form of price deflation but rather in causing house price inflation to near its peak. The FNB June house price index rose 12,6% year-on-year. Loos says though that’s healthy the rate of acceleration has slowed.
FINANCIAL PRESSURE STILL ON FNB reports there’s been significant selling of houses to downscale due to financial pressure. While recent quarters saw a significant improvement (decline) in the percentage of sellers being people selling to downscale due to financial pressure – from the 34% peak in second quarter 2009 to 20% early in 2010 – the second quarter estimate stalled at 20%.
