Demand Still a Problem – FNB Barometer

The information in this article is courtesy of Realestateweb (Property market sentiment worsens – 15 July 2009)

The latest FNB Residential Property Barometer shows that demand for residential property is still very low causing an oversupply of stock on the market. Estate Agents who took part in the survey believe that the banks’ strict lending criteria and high deposits on home loans are to be blame for the low levels of demand.

Other finding by the survey include that more than 30% of seller would like to offload properties in order to downgrade because of financial pressure. Also, low-income earners are apparently struggling the most, with more that 41% of seller indicating to agents that financial woes are their reason for selling.

Estate agents canvassed in the survey also suggested that about a third of investment properties returned to the market have been sold for less that the previous purchase price. The average time a property spends on the market prior to the sale increased to 21 weeks and one day, according to the survey.

With 86% of sellers required to drop their asking prices in order to make sale, estate agents still feel that seller are being unrealistic about their property values.

A more positive finding of the survey is that only 8% of sellers are mentioning emigration as a reason for selling. This is significantly down from 20% in the 3rd quarter of 2008.

Another finding is that fewer foreigners are buying property in South Africa although FNB reported to see a slight hint in the figures that expat buying has risen.

Although FNB said that they are starting to experience improvement in arrears situation, there is only a mild improvement in the demand situation, with the supply figures reflecting widespread financial pressure.