Half of South Africa’s estate agents ended 2016 believing 2017 would be more of the same, with 25% each expecting better or worse buying and selling activity levels.
This is according to the quarterly FNB Estate Agent Survey, which asked estate agents if they expected activity levels to increase, remain the same, or decline in the next three months.
“It is probably not surprising to hear that, given the agent experience of weakening activity levels in recent years, agent near-term expectations of activity have moderated too,” said John Loos, FNB household sector strategist, noting that “recency bias” (where the recent past experience has a strong influence on our future expectations) plays a big role in current sentiment. “As at Q4 2016, the percentage of agents expecting a decrease in activity in the next three months was 25%, those expecting unchanged activity measured 50% of the total, while the remaining 25% expected an increase.”
Loos, however, notes that a single quarter’s result does not paint the full picture, and when using a four-quarter moving average, the Home Buying Confidence Indicator* which runs on a scale of -1 to 1, the result for 2016 was +0.13%.
This is not surprising, with the number of bonds granted between Q3 2015 and Q3 2016 dropping by 11%, and house price growth constraining quarter after quarter. A tough few years for agents has weighed heavily on their expectations for 2017, where only 3.84% believe house prices will grow in the next 12 months.
* Each time an agent returns an “increase” answer (with regard to expectations of activity in the next 3 months), we assign a rating of +1 to that answer, an “unchanged” answer gets a zero assigned to it, and a “decrease” answer gets a negative -1 assigned to it. These ratings are then aggregated into the Home Buying Confidence Indicator, which then runs on a scale of -1 to 1, and is the 4-quarter moving average for each quarter’s aggregate rating.