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Johannesburg - Demand for residential property in the City
of Cape Town is higher than that of the national average, the second quarter
FNB Estate Agent survey revealed on Monday.
Estate agents surveyed put demand in the city at 6.18 on a
scale of one to 10, a second consecutive quarter increase. This was above the
national average rating of 5.87.
"However, the survey may be hinting at 'seller
optimism', keeping prices unrealistically high," said Clinton Martle,
FNB's Western Cape property leader sales manager in a statement.
In the survey, estate agents were asked about their
perceptions on residential demand, rating it on a scale of one to 10.
When compared to the same quarter last year, demand activity
rated 11% higher.
"This is the first time that we've seen positive
year-on-year growth in the demand rating since the fourth quarter of 2010. This
is also the highest demand rating since the first quarter of 2010," Martle
said.
He said there still appeared to be a lack of pricing
realism.
Two of the indicators for pricing realism appeared to be
moving in contradictory directions. One of them was the time a property spent
on the market before it sold.
"The broad trend in this average has been an upward
drift since early 2010, to a second quarter average time of 20 weeks," he
said.
"This would appear strange at a time when agents
perceive demand strength to have improved."
Martle said the trend could be attributed to seller
optimism.
This was reflected by a significant decline in the
percentage of properties sold below asking price from 100% in the final quarter
of 2011 to 80% in the second quarter of 2012.
"The apparent contradiction can perhaps only be
explained by increased seller optimism, causing fewer sellers to drop their
asking price because they are confident of achieving the price they want, and
thereby causing the time on the market to remain long," Martle said.
Also, the percentage by which sellers had to drop their
asking price had not increased, still hovering around 10%.
Martle said there was also improvement in the buy-to-let
segment in the Western Cape, from a low of 4% in the third quarter of 2010, to
a significant 14% in the second quarter of 2012.
As a result of increased buy-to-let buying, primary
residential buying slipped back to 82% of total buying in the second quarter of
2012, down from a peak of 93% in the second quarter of 2010.
The percentage of first-time buyers contributed 21.5% of the
total number of buyers for the two quarters, up to and including the second
quarter of 2012.
The percentage of buying by couples decreased from a peak of
90% in the second half of 2010, to 75% in the second half of 2012.
In the Cape Metro, the percentage of sellers who sold their
houses to upgrade, increased from 11% in the third quarter of 2011 to 19% in
the second quarter of 2012.
"However, despite improved confidence in the Western
Cape residential market, we must not fool ourselves as to the extent of the
financial frailty of many other households that still exists," said
Martle.
He said this was best reflected in the estimated percentage of sellers selling to downscale, due to financial pressure. This segment stood at a high of 21% in the second quarter.
