Johannesburg - Demand for residential property increased in the first quarter of 2013, according to the FNB Estate Agent Survey released on Tuesday.
The indicator for demand in the survey rose from the previous 5.89 to 6.57, FNB household and consumer strategist John Loos said.
"This is the highest level since the first quarter of 2007, which was just prior the big slump in the residential property market," he said.
On seasonally adjusted data, the demand rating also rose from a previous quarter's six to 6.26 in the first quarter of 2013, the highest level since the first quarter of 2007.
"So the rise was more than just seasonal factors, it would appear," Loos said.
The FNB Estate Agent Survey is a useful tool used to gain insight into residential market trends first hand. It is of a sample of estate agents, predominantly in South Africa's major metro regions.
The first question asked agents their perceptions of residential demand in their areas, a subjective question where they have to give a score between one and 10, with 10 being the strongest level of demand.
In the first quarter of 2013 there was a noticeable increase in the percentage of estate agents citing stock constraints as an issue in their work, from 13% in the previous quarter to 23%.
Loos said stock constraints became the single-most important issue cited by agents when providing factors influencing their expectations of near-term activity.
Agents reported a longer estimated time of properties on the market in the first quarter, along with an increase in the percentage of sellers having to drop their asking prices.
From an estimate of 15 weeks and four days in the fourth quarter of 2012, the average time a house spent on the market rose in the first quarter of 2013 to 17 weeks and two days.
The percentage of properties sold at less than asking price was 85 in the fourth quarter of 2012. This rose to 89% in the first quarter 2013 survey.
Furthermore, agents were asked to estimate the average percentage asking price drop on those properties, where a price drop was required to make the sale. This average decrease had remained stable for the past four quarters, at an estimated 10%, Loos said.
"It is possible that seller optimism increases as demand is perceived to be improving, and that in turn keeps prices ahead of demand," Loos said.
On a quarter-to-quarter basis, the first quarter of 2013 saw some increase in the percentage of first-time buyers, from 21% in the previous quarter to 24%.
Another noticeable improvement was that agents pointed to a further decline in the number of sellers downscaling due to financial pressure. In the first quarter of 2013 they estimated that 15% of sellers were selling to downscale due to financial pressure.
This was down from the previous quarter's 18%, suggesting that a large part of the household downscaling process, in order to adjust to the recessionary shock of 2008/09, had been completed.