The demand for residential property fell in the fourth quarter of 2012, depicting a weakened economy in the second half of the year, First National Bank said on Tuesday.

Its estate agents survey's leading residential demand activity indicator fell from 6.11 in the previous quarter to 5.89 in the last quarter of 2012.

Even on a seasonally adjusted basis, the demand for residential property declined from 6.17 to 6.11.

The survey is used to gauge opinion on property demand and expectations, asking questions which require a score on a scale of one to 10.

The bank's household and consumer strategist John Loos said while demand in the residential market had declined, the market remained within a stable bracket of between four and six.

In the last quarter of 2012, estate agents might have been starting to feel “some effect of the weakened economy”, he said.

In the final two quarters of 2012, the average time of a property on the market prior to sale was 15 weeks and six days.

“This was significantly better than the 17 weeks and four days of the second quarter, suggesting some improvement in the balance between demand and supply,” Loos said.

Judging from the healthier market days prior to 2008, a level closer to eight weeks on the market was a benchmark for a strong market, he said.

When estate agents were asked about their market expectations, 13 percent cited stock constraints as a problem. This was up from five percent registered in the previous quarter.

Loos said despite an overall stronger 2012, compared to 2011, slightly slower demand late in 2012 was to be expected, as major industrial action disruptions, along with a slowing global economy, had caused subdued domestic economic growth.

Estate agents also pointed towards a significant level of financial pressure as a high percentage of sellers were still selling to move into smaller properties.

However, the agents indicated a mild improvement in the number of people downscaling, as this figure fell from 20 to 18 percent in the fourth quarter. - Sapa