Selling your house is becoming a lot harder

BT –

New data from FNB shows that houses in South Africa are taking longer to sell, with the property sector moving into a space where supply exceeds demand.

The lender said that the second quarter saw the average time of homes on the market continue to climb from 13 weeks and four days previous to 15 weeks and four days, a sharp jump.

The noticeable increase in the national average time on the market since early last year was arguably the lagged response to a slowing in housing demand through 2014 and 2015.

During those two years, FNB pointed out that interest rates increased, economic growth continued to slow, and housing demand was slow as a result.

Worse still, FNB said that a greater percentage of sellers are being required to drop their asking price.

The bank said it asked agents to estimate the percentage of sellers ultimately being required to drop their asking price to make the sale.

“While the overwhelming majority of sellers do tend to start high and allow themselves to be bargained down as a strategy, we nevertheless find this estimated percentage of sellers having to drop their asking price have crept up.

“From a multi-year low of 78% in the second quarter of 2014, the market weakening since then has brought about a mild upward trend to 92% of all sellers dropping their asking price in the second quarter of 2017, according to the respondents’ estimates,” said household and property sector strategist at FNB Home Loans, John Loos.

FNB said that a key residential “demand-side” question that is asked to the survey respondents, in the FNB Estate Agent Survey, is to give an estimate of how many serious viewers per show house they get before making the sale.

“From a multi-year high average of 14.42 estimated serious viewers per show house for the 4-quarters of 2013, we saw a noticeable decline to 10.66 average for the four quarters of 2015. Thereafter, the broad movement has been more-or-less sideways up to the present, averaging 10.87 viewers for the four quarters up to and including the 2nd quarter of 2017,” Loos said.

“While according to this indicator, demand no longer appears to be declining, the average number of serious viewers since early 2016 has moved at a lower level than in prior years, and this is seemingly at a level where demand is not strong enough to mop up available residential supply,” the analyst said.

Loos said that the second quarter of 2017 saw a decline from a previous 12% of agents citing “stock constraints” to 8%, and the percentage citing stock constraints is now far below the 24% high of early 2015.