85 percent of properties sell below asking price

The perceptions of estate agents about activity levels in the residential property market in the near future have shifted and deteriorated significantly, the latest FNB estate agents survey shows.

FNB household and consumer sector strategist John Loos said agents reported only a mild weakening in demand activity in the residential property market in the fourth quarter survey, but had become a little less optimistic about the near-term future.

Far fewer agents perceived any positive consumer sentiment in the market and their perceptions might be starting to reflect the significantly weaker economy late last year, which was severely disrupted by strike action in certain sectors, he said.

The survey revealed that 16 percent of estate agents cited "economic stress or pessimism" as a factor influencing perceptions of near-term activity levels while only 1 percent perceived an environment of "consumer positive sentiment".

Loos said this represented a significant swing from 14 percent citing "consumer positive sentiment" in the third quarter and 11 percent citing "economic stress or pessimism".

Agents also still pointed towards very significant financial pressure, which manifested itself in the still high percentage of sellers downscaling due to financial pressure.

Agents indicated a mild improvement in the percentage of sellers downscaling due to financial pressure to 18 percent in the fourth quarter from 20 percent in the previous quarter, Loos said, but stressed the importance of this indicator of financial pressure declining significantly before the next interest rate hiking cycle.

The average time a house remained on the market before being sold declined last year, suggesting greater price realism in the market.

However, the percentage of properties sold at less than the asking price remained virtually unchanged at 85 percent in the last quarter.

Loos said the average time a property remained on the market before being sold declined to 15 weeks and four days in the fourth quarter from 15 weeks and six days in the previous quarter, a significant improvement on the 17 weeks and four days in the second quarter.

This was an encouraging development and suggested some improvement in the level of pricing realism and balance between demand and supply.

However, Loos added that the average time a property remained on the market before being sold at the end of last year still remained too long to represent a strong market.

Far fewer agents perceived any consumer positive sentiment in the market.

Despite agents reporting that properties were spending a shorter period on the market before being sold, they estimated there was only a very slight decline in the percentage of sellers who were required to reduce their asking price to conclude a sale, he said.

Loos said 85 percent of properties were sold at less than the asking price in the fourth quarter, which was insignificantly different from the 87 percent in the second quarter and 84 percent in the third quarter.

The average percentage sellers were required to reduce their price to conclude a sale had moderated mildly from a 13 percent cut in the second half of 2011 to 10 percent by the second quarter of last year.

Overall agents had painted a picture of a better residential property market last year than in 2011 but also started hinting that they were seeing signs of a weaker economy late in the year, which could, of course, be a negative drag on residential property, Loos said.

(Business Report)

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