Homes less time on market, 90% of sellers have to drop price
With the average estimated time a home for sale sits on the market decreasing from 15 weeks in Q4 2016 to 13 weeks and 4 days in Q1 2017, is it too early for the industry to anticipate an improved year?
John Loos, FNB’s household and property sector strategist, points to a few indicators that show the market demand is strengthening.
“From the FNB Estate Agent Survey, the residential market activity indicator has seen two successive quarters of increase, from a 5.59 multi-year low (on a scale of 1 to 10) in Q3 2016 to 6.31 by Q1 2017,” said Loos, noting a decline in the average time of homes on the market is about the interaction between demand and supply, not just about rising demand. “The issue of residential stock constraints is by no means as acute as it was in Q1 2015 when 24% of agents surveyed cited such stock constraints as a key issue in their areas. But the percentage of agents citing stock constraints has risen recently from a low of 6.7% as at Q3 2016, to 12% in Q1 2017, suggesting that residential supply relative to demand has once again tightened.”
The estimated percentage of sellers being required to drop their asking price to make a sale is currently at 90%, but the percentage at which sellers have to drop their asking price by has improved: from -10% in Q4 2016 to -7.3% in Q1 2017.