More properties selling below purchase price

The percentage of properties sold below their original purchase price increased to 12 percent in January this year from 9.8 percent in August last year.

This is based on a residential-dominated sample compiled by FNB on the deed office property data registered by individuals for properties that exchanged hands for R10 million or less.

John Loos, a household and property sector strategist at FNB, attributed this increase of resale price deflation to the lagged impact of the hike in interests rates by a total of two percentage points from early 2014 and early last year and the stagnation in broad economic growth from 20112 until last year.

The estimated percentage of homes sold at prices below the previous purchase price had risen mildly in recent months.

But he said this should not be surprising, given that FNB?s average house price inflation had recently slowed year-onyear and it was to be expected to see some increase in the percentage of homes whose resale price had deflated.

FNB said of the 12.3 percent of homes that were sold in January this year for prices below their original purchase price, 2.9 percent were sold at zero to 5 percent below the previous purchase price and 9.4 percent at more than 5 percent below their previous purchase price. selling at more than 5 percent below their previous selling price.

Loos stressed the estimated 12.3 percent of homes that sold for less than the prior purchase price was still ?a relatively moderate? percentage by historic standards. Following the recession and interest rate peak of 2008/09, the estimated percentage of house resale price deflation peaked at 23.5 percent of homes sold in September 2009 with 20.6 percent

In the extreme property boom times prior to 2008, the percentage of properties resold at deflated prices dropped to as low as 2.3 percent of total sales by June 2006, he said.

The most recent estimate in January this year of 12.3 percent of total homes being resold at deflated prices was somewhere between what was historically ?a strong level? and what was ?a weak level?.

Of the 87.7 percent of residential properties that were sold in January this year for more than their previous purchase price, 73.6 percent were sold for 110 percent or more than the previous purchase price, 8.6 percent at 105 percent to 109 percent of their previous purchase price and 5.5 percent at 100 percent to 104 percent of their previous purchase price.

Although the rising trend in the incidence of resale price deflation was not yet at high levels, it was important for both mortgage lenders and homeowners.

| business report |

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us