According the to the FNB property barometer – a report published every three months, which aims to measure the health of the local property market – the unrealistic expectations of sellers will be the most significant contributor to the slowing down of the overall property market.
Although low interest rates have made the current economic conditions in South Africa favorable, the high level of property prices has meant that many individuals are still unable to afford to purchase houses in their preferred areas, which continues to strengthen the demand for rental property.
The report highlights four key areas which help to define the property trend:
1) the percentage of property sold at less than asking price
2) the length of time the property remains on the market
3) percentage of property bought-to-let
4) the perceptions of market activity over the next three months.
According to FNB as much as 48% of residential properties sold in the third quarter of 2005 were lower than asking price. In the first quarter of 2005 this figure was less than 30%.
The fact that the majority of properties took longer than 7 weeks to sale, further supports the notion that sellers are over pricing their homes. Almost 70% of all properties sold in the third quarter took 8 weeks or longer to sell.
FNB reports that it expects the overall market to slow down as there still exists a tendency among sellers to continue to hold on to potentially unrealistic prices.
FNB’s property barometer report contains information gathered from local real estate professionals and covers residential property market activity, perceptions and expectations. So, whether you are a buyer, a seller or just curious, you can now get a reliable and accurate source of information on the residential property market.
Download the FNB Residential Property Barometer.