A statement made earlier this year by the Rawson Property Group’s Managing Director Tony Clarke to the effect that the South African economy and therefore the South African property market, while less affected than many countries worldwide by the serious Eurozone global economic problems, cannot expect to shrug off the effect that these will have on South Africa appears to be confirmed by the latest (15th August 2012) FNB Gauteng Residential Property Review.
“By and large,” said Clarke, “this report can be taken as a boost to the residential sector’s confidence. However, it does have one or two negative aspects which cannot be ignored.”
The positive factors, said Clarke, are that in the second quarter of 2012 Gauteng house prices showed a further acceleration in their year-on-year growth rate, which rose from 6,9% in the first quarter to 8,1% in the second quarter.
“The FNB report points out that this was the fifth consecutive quarter in which year-on-year growth has improved and that it led to the average price of Gauteng properties sold rising to R887,633, an all-time high.”
Nevertheless, said Clarke, the FNB report also records that the 2,5% increase in the second quarter was not as high as that of some of the previous quarters and this could indicate an onset of price growth slowdowns.
Furthermore, he said, the FNB Gauteng estate agency survey reveals that what it terms “residential demand activity” dropped on their scale from 6,51 to 5.78.
“I have no doubt,” said Clarke, “that many people would attribute this to the onset of winter – when sales always decline – but when one looks at the year-on-year Demand Activity Indicator, it showed a 4,7% growth in the first quarter and 0,5% decline in the second quarter. Again, a slow-down could be taking place.”
The Demand Activity Indicator for Gauteng, said Clarke, is now rated at a low 5,71 – in contrast to that of Cape Town which still has the country’s highest figure at 6,18.
In addition, the average time taken to sell a Gauteng home is now 15 weeks and five days, again a longer time than in the previous quarter. The FNB, said Clarke, comment that in a really well balanced market the average time should be eight weeks (as it was in early 2007): 87% of homes are now sold below their asking price and the average price drop is now 10%.
“These figures are not in any way disastrous but they do reflect once again a small decline,” said Clarke.
Clarke said that sorting through the mass of statistics and data so efficiently provided by FNB, it becomes clear that, while certain Gauteng areas (such as Glenvista and North Riding) continue to see demand at high levels and even ongoing price increases, estate agents in general now anticipate lower demand for property in the next quarter: on the -1 to + 1 indicator, the majority of agents in Gauteng, he said, put their confidence level at 0,11. This is a definite drop back from previous levels.
Asked what conclusions can be arrived at from the survey, Clarke said that Gauteng figures are always interesting because they tend to set a pattern, which is then followed by the rest of South Africa. However, he said, it would be a mistake to over-emphasize the relatively small declines recorded by FNB recently and he predicted that the summer figures will once again show an improved increase in house prices and estate agents’ confidence.
