Roy Cokayne
There has been a mild improvement in the residential property market, with the average time a property remains on the market before being sold improving to an estimated 15 weeks and six days in the third quarter from 17 weeks and four days in the previous quarter, according to the latest FNB estate agent survey.
But Clinton Martle, an FNB property leader sales strategist, stressed last week that 15 weeks and six days still meant a property remained on the market for an average of almost four months before it was sold, which was too long to represent a healthy market.
“Judging from the healthier market days prior to 2008, a level nearer to eight weeks on the market appears to be the benchmark for a ‘healthy’ market, so there remains some way to go,” he said.
“One would not yet expect to see much price growth in real terms at this length of average time on the market.”
The survey, released last week, also indicated a further decline in the percentage of sellers who had to drop their asking price to make a sale to 84 percent from 87 percent in the same period. This average price drop was unchanged at minus 10 percent from minus 13 percent at the end of 2011.
However, the year-on-year house price index revealed that house price growth slowed further to 5 percent last month from 5.3 percent in August, although the rate of change in the seasonally adjusted month-on-month index slowed to minus 0.2 percent last month from minus 0.43 percent in August.
Martle said this might be the start of the positive impact from the interest rate reduction in July.
The survey also suggested there was a small improvement in the balance between demand and supply in the residential market between the second and third quarters. Martle said this was something that was not only driven by demand slowing but also by the availability of stock for sale.
He said the third quarter survey was completed in August, which normally returned a seasonally weak result because it was undertaken during winter. But this year it was completed shortly after the surprise 0.5 percentage point interest rate cut by the Reserve Bank, and this small stimulus may have played a small positive role in the survey results.
However, Martle said the residential market still appeared to be unrealistically priced, as reflected in the average time properties were on the market before they were sold remaining close to four months.
Household indebtedness had resumed its deterioration in the first half of this year by rising to 76.3 percent in the second quarter. This was a key residential demand constraint.