JOHANNESBURG - Although estate agents reported a weakening in the residential property market in the fourth quarter of last year, FNB believes the improved sentiment in the country following the ANC’s elective conference in December could lead to a mildly stronger housing market this year.
The bank said the SA Reserve Bank and OECD leading business cycle indicators for South Africa had for some time been rising, suggesting improved future near term economic performance.
John Loos, a household and property strategist at FNB, said these factors could contribute to improved housing demand this year and expected FNB’s first quarter estate agents survey to begin showing some signs of housing market strengthening.
Loos said housing demand had moved broadly sideways at low levels since 2016, adding that a weakening or strengthening in the housing market did not refer to the strength of housing demand but rather to the balance between housing demand and housing supply.
He said one indicator of housing demand was the estimate by agents in FNB’s estate agent survey of the average number of “serious” viewers per show house prior to the home being sold.
The average estimate was 10.61 viewers a show house in the fourth quarter of last year, which was marginally higher than the 10.29 estimate in the previous quarter but lower than the multi-year high of 16.69 viewers reached at a stage in 2013.
Loos said there was a further weakening in the housing market’s balance between supply and demand last year, which was reflected in a further increase in the estimated average time a home remained on the market before being sold to 17 weeks and two days in the fourth quarter of last year from the low of 11 weeks and one day at the beginning of 2016.
He said an estimated 95 percent of total sellers were required at the end of last year to reduce their asking price to secure a sale, which was an increase from the 93 percent in the previous quarter and 78 percent in the second quarter of 2014.
The estimated average reduction in asking price increased to 10 percent in the fourth quarter from around 7 percent in the first two quarters of last year.
Loos said agents expected average house prices to increase by 3.9 percent this year, which represented the second consecutive quarter of average house price growth slowingfrom 4.5 percent in the second quarter of last year.
Rhys Dyer, the chief executive of mortgage originator ooba, said it the economic policy uncertainty that had challenged the economy over the past few years stabilised, consumer sentiment would recuperate and boost demand in the property market.
“This in turn will drive increased property price growth over time. We can then expect the year-on-year property price growth to rise by 6 percent for the last quarter of 2018, compared to only 1.4 percent achieved for the fourth quarter of 2016,” he said.
Tony Clarke, the managing director of the Rawson Property Group, said there was a slow but consistent decrease in market activity across the country last year, which was mainly due to a decrease in consumer confidence and spending power thanks to the country’s tumultuous political and economic climate and a reluctance by sellers to adjust their asking prices.
Clarke said these influences were unlikely to change much this year and would almost certainly continue to depress market activity in the mid to high-end price bands, with the outlook for entry-level properties much more positive.
- BUSINESS REPORT