Buyers Appear to be Holding Off on SA Property

Houses Not Selling Despite Low Prices

An article by Dispatch Online’s business correspondent, Xolile Bhengu has drawn attention to the fact that despite lower prices, houses are harder to sell. In fact, sellers are having to settle for far less than asking price and real estate agents are not optimistic about the market improving in the current quarter. This is according to First National Bank’s latest Residential Property Barometer.

The recent survey by FNB is yet another confirmation that the continued economic slowdown is putting pressure on homeowners. Based on perception, agents polled in the survey reported that houses in the greater Tshwane area and the Western Cape have been the slowest movers during the second quarter of 2008.

The FNB Property Barometer indicated that four out of five properties remained on the market for four months before reaching a sale. Despite the reduction in prices, at least 85% of sellers settled for less than the original asking price, which is up slightly on the first quarter. The sale of lower income housing worth less than R350 000 was stable in comparison, but still averaged about 11 weeks on the market.

FNB conducted the survey by interviewing 150 estate agents from across South Africa, many working for some of the top estate agencies. Property strategist for FNB Home Loans, John Loos said that rising interest rates was the top cause for the slowdown according to estate agents, but this also included uncertainty around the economy and the political climate in the country.

Emigration is said to have accounted for 18% of sales in the second quarter, which is up 12% from the previous quarter. 8% of buyers were said to be moving closer to their places of work. Loos added that the volume of properties on the market is not surprising, particularly in light of the ANC’s Polokwane conference in December last year, where Jacob Zuma was elected party president, the electricity crisis, the election shenanigans in neighbouring Zimbabwe and the recent xenophobic violence.

Loos said, “It must be taken into account that the negative sentiment on the South African outlook and the questions about leadership come largely from the minority population in former white suburbs. Even estate agents are feeling miserable. Only 15% of the respondents said they believed there would be a market turn in the next quarter”.

While analysts have said it is too soon to start investing in the market, Loos believes that this is a good time to buy and will get even better as time goes on. “Interest rates may be high now, but they also eventually go down. If you can afford to buy a property, the opportunity to buy looks good in the next quarter,” he said.

The information in this article is courtesy of Xolile Bhengu (“Houses harder to sell despite lower prices”, Dispatch Online, 22 July 2008).

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