Between 2014 to early 2016, the estimated average time a home sat on the market before selling had been moving broadly sideways at levels around 12 weeks (just less than three months. Through 2016 and into 2017, however, the market appears to have been moving broadly away from that equilibrium.
“In the FNB Estate Agent Survey for Q1 2017, we did see a decline in the average time of homes on the market, after three prior quarters of increase,” said John Loos, FNB’s household sector strategist. “This, we thought, may be the start of some very mild recovery in the residential market, with two consecutive quarters of rise in the FNB Residential Activity Rating also being witnessed up to and including Q1 2017.”
Q2 2017 had other plans, and saw time of homes on the market resume its rise from 13 weeks and 4 days in the Q1 2017 to 15 weeks and 4 days in Q2 2017.
Are sellers increasingly overpricing?
According to FNB numbers, the estimated percentage of sellers who have to drop their asking price has risen, from 78% in Q2 2014 to 92% in Q2 2017.
From a multi-year high average of 14.42 estimated serious viewers per show house for the four quarters of 2013, this number has declined to an average of 10.87 viewers for the four quarters up to and including Q2 2017.
Regional time on market comparison
- The average time on the market in the country’s coastal metros averaged 20 weeks and 3 days in Q2 2017.
- The City of Cape Town’s average time on the market has risen noticeably from 13 weeks and 6 days in Q1 2017 to 18 weeks and 4 days in Q2 2017.
- In the Gauteng region homes on the market averaged 12 weeks in Q2 2017.
- Using a two-quarter moving average to boost sample size at city level, the three coastal cities (Cape Town, Ethekwini and Nelson Mandela Bay) are noticeably weaker, all averaging more than 16 weeks on the market for Q1 2017.
Joburg averaged a healthier 12.86 weeks and Tshwane metro an impressive 9.57 weeks for the same two quarters.
Whose sellers have greater pricing power?
Johannesburg and Tshwane are home to relatively high estimates for the percentage of sellers being required to drop their asking price to make the sale.
“Joburg’s two-quarter average was 89% of total sellers being required to drop their price, while Tshwane’s average was 95%, in the first 2 quarters of 2017,” said Loos. “Interestingly, though, is that while Cape Town’s average time on the market has risen, suggesting a weakening in the level of demand relative to supply at the high prevailing price levels, still 29% of that city’s agents perceived ‘stock constraints’ as an issue in their lives in the first 2 quarters of 2017. This is far higher than any other city, whereas only 4% of agents in Joburg and zero in Tshwane reported stock constraints.
“However, we do expect that this percentage will decline noticeably in the near term in Cape Town, given that homes appear to be staying on the market for longer of late.”
How long does it take to sell a high-end home?
High-end homes on average take 24 weeks to sell, while it takes eight weeks in the lower income segment in South Africa.