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Further hints that a buyers’ market is on its way – FNB

CAPTION 5 - R6.5 blue horizon bayEstate agents surveyed in Q2 2016 presented a picture of a “well balanced market”, according to John Loos, FNB household and property sector strategist. “However, indications are that the slowing demand trend has resumed in Q2 after a brief stalling in the previous quarter, supply constraints are being alleviated, and the market balance may have begun to weaken,” he said. “It is early days, but some quarterly deterioration in indicators of market balance or price realism begin to hint at a possible shift away from market equilibrium to come.”

Key takeouts from estate agents sampled:

  • Average estimated number of viewers per show house declined to 9.64 in Q2 2016, down from 11.6 in the prior quarter, and below the 11.05 estimate for the corresponding quarter a year ago. The cumulative decline in recent years has become considerable, from a high of 16.69 estimated in Q2 2013.
  • The percentage of agents citing stock constraints as a factor in shaping their near-term expectations declined to 10.7%, from 17.3% in the previous quarter. This is significantly down from the 24% high reached in Q1 2015.
  • The market remains well balanced. However, the estimated average time of properties on the market showed a noticeable increase from the previous quarter’s 11 weeks and 1 day, to 13 weeks and 4 days. Although it is too early to draw conclusions after only one quarter, and such an average time remains a fairly solid one still, this increase may hint at a near-term shift in the market away from equilibrium.

  • Agents reported a slight further rise in the percentage of sellers having to drop their asking price, from 88% in the previous quarter to 92% in Q2 2016. This is noticeably higher than the 78% recorded back in Q2 2014. The estimated average percentage asking price drop, on those properties where a price drop is required to make the sale, was -9%, slightly more than the -8% of the previous quarter, but unchanged from the 2nd quarter of a year ago.

  • Agent perceptions of housing affordability have deteriorated mildly, with as many as 31% saying that “income levels have got far behind house prices”. This is compared to 11% back in Q3 2014.


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