'Bleak outlook' for property sales in hard times

'Bleak outlook' for property sales in hard times

Residential properties in South Africa are selling for less and staying on the market longer - and the outlook is expected to remain bleak for at least another two years.

Samuel Seeff, chairman of Seeff properties, said that "on the whole, house prices have dropped 15 to 20 percent and properties are taking four to six months and longer to sell if they are not priced in line with what buyers' expectations".

This is backed by data in FNB's estate agent survey, released last week, which puts the average length of time a house spends on the market at 17 weeks and 1 day - up from 15 weeks and 1 day in the previous quarter.

In addition, FNB says, 91 percent of home sellers are having to drop their asking price, with the average at 13 percent. This was again up from the previous quarter, in which 87 percent of sellers were forced to drop their asking prices by, on average, 11 percent.

Seeff reported the following trends in the province:

•Very few properties in the Southern Suburbs, on the Atlantic Seaboard and in the Waterfront and City Bowl priced above R20 million are selling.

•Rondebosch East and Plumstead are showing the largest sales in the Southern Suburbs because of the value they offer.

•Prices in Camps Bay are down by about 20 percent from their pre-2008 levels. Most properties sold are below the R10m mark, with many below R7m.

•Sellers at the V&A Waterfront are accepting "cheeky" offers up to 20 percent below the asking price on apartments in the R3 to R5 million range.

•In the City Bowl, sellers are accepting offers well below asking price.

•Sectional title apartments and homes are selling well, mostly due to downsizing.

•The Garden Route is mostly a second-home market and these are not selling well, given the economic slump.

Pam Golding properties say there is strong demand for Durbanville properties in the R750 000 to R2m range, and that such properties typically sell in six to eight weeks. Meanwhile, properties on the Cape Flats, particularly in Mitchells Plain, Athlone and Elsies River are popular among first-time home buyers with a two-bedroom starter home in Mitchells Plain generally starting from around R250 000.

Anton de Leeuw, of property investment firm YDL, said: " There is an imbalance between supply and demand. The inherent demand is constrained by many factors including slow economic growth, broader economic issues and wages. Also, the National Credit Act stifled access to funding and the last interest rate cut was in November 2010 so there is no stimulus."

And the experts don't see a change soon.

Property expert Erwin Rode says he is " bearish" about prospects and he believes the market is unlikely to change in the next four years "irrespective of what is happening in the outside world".

He adds that properties are still "hugely overvalued", by up to 15 percent.

"What is happening in Western Europe and North America has the ability to worsen my prediction," Rode said.

De Leeuw said he would be " surprised if the situation picked up markedly in the next two years" while both ABSA and FNB indicate declines in nominal house price growth are likely to continue at least until the end of the year.

Absa's House Price Index report, released this month, points to low real economic growth, continued pressure on employment, consumer price inflation above 5 percent, no interest rate cuts, low levels of consumer confidence and a high number of people with damaged credit records.

According to FNB, most sales were by older home owners downsizing their homes after their children have moved out. This accounts for 23 percent of home salesn

Weekend Argus (Saturday Edition)


Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!