Home sales lose their sizzle
February 11, 2008
Johannesburg - Residential market activity levels dropped in the final quarter of 2007, according to FNB's Residential Property Confidence Indicator.
Jan Kleynhans, chief executive officer at FNB Home Loans said on Monday: "The residential property market continued to slow in fourth-quarter 2007. Despite a brief seasonal upswing in market activity, year-on-year trends indicate that the residential market is sluggish."
FNB research indicated rising interest rates, inflationary pressures and the affect of the National Credit Act - which has now been in operation for eight months - continue to constraining the market.
"Sellers are still struggling to obtain their asking prices, properties are remaining on the market for almost three months on average, the proportion of first time home buyers is relatively low, and the buy-to let market is at an all time low," said Kleynhans.
FNB's Residential Property Barometer also recorded a decrease in property renovation, a further symptom of the financial pressure on consumers.
However, the recent decision to hold the current interest rate at 14.5 percent could fuel a somewhat stagnant market, said Kleynhans.
"FNB believes interest rates have more than likely peaked and further sideways movements are expected for the most part of 2008."
Property price inflation in the lower-prices segment continued to outperform inflation levels for the middle and upper-prices segments, Kleynhans said.
"Lower priced properties sell faster and more of them achieve their asking price than expensive properties."
The South African residential property market had certainly seen a significant slowdown since the heydays of 2003/2004, he said.
However, he believed that "we are near to the bottom of the cycle now, and anticipate an improvement in this market in the near future." - Sapa
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