'Too many properties on market'
'Too many properties on market'
There are too many houses for sale on the South African market despite dropping prices - and any improvement in the situation remains unlikely for some time.
The surplus is because of the impact of the troubled global economy on the local economy and the difficulty in getting a bond, estate agents and economists say.
Houses are on the market for more than four months and up to 90 percent of sellers are being forced to drop their asking price by up to 13 percent, according to First National Bank household and property sector strategist John Loos.
He said it was a buyers' market, with prices having declined by about 17 percent in real terms (which refer to average house prices adjusted for consumer price inflation) since February 2008.
"We believe that indications emanating from the latest results of the FNB Estate Agent Survey suggest that the residential market still has some way to go before it reaches that 'holy grail' where oversupplies disappear and the market can finally be said to be realistically priced and, yes, in equilibrium."
Absa Home Loans property analyst Jacques du Toit said the average price of a mid-segment house was almost 14 percent lower in November last year than it was in August 2007. "(This) was the result of average nominal house price growth being below the average headline consumer price inflation rate over the past four-anda-half years."
Nominal house price growth, where the effects of inflation are not taken into account, in the middle segment of the SA housing market was 2.2 percent in 2011. This was down from growth of 7.3 percent in 2010.
Auction Alliance CEO Rael Levitt said improvement in house prices remained unlikely. "This (2011) was a tough year for South African real estate and, after three years of trudging through a severe downturn, the year did not present a path to recovery. As buyer-demand cooled, concerns about global sovereign debt heightened and weak prospects for the local economy worried investors.
"From an auction perspective, we saw a distinct cool-off in demand from the third quarter. In an industry well versed in cheery talk about prospects, no one can claim that the property market has endured anything other than a bruising last year. My outlook for 2012 is disquieting. Quite how bad will depend on a myriad global and local issues, but there is no doubt that 2012 will be filled with challenges."
For the next 18 months, he said, improvement in house prices seemed unlikely, given uncertainties over the strength of the economic recovery.
Absa's latest property price indicator showed that the average price of a mid-segment house was almost 14 percent lower in November than it was in August 2007. Du Toit said the price situation was the result of average nominal house-price growth being below the average headline consumer price inflation rate over the past four-anda-half years. "When average annual inflation of 5 percent was factored in, house prices deflated by 2.7 percent in 2011."
Du Toit said unchanged interest rates in 2011, rising inflation, high levels of debt, damaged credit records and tight labour market conditions all played a role.
"House price growth is forecast to remain relatively low this year, while prices are set to decline further in real terms."
Business Report
There are too many houses for sale on the South African market despite dropping prices - and any improvement in the situation remains unlikely for some time.
The surplus is because of the impact of the troubled global economy on the local economy and the difficulty in getting a bond, estate agents and economists say.
Houses are on the market for more than four months and up to 90 percent of sellers are being forced to drop their asking price by up to 13 percent, according to First National Bank household and property sector strategist John Loos.
He said it was a buyers' market, with prices having declined by about 17 percent in real terms (which refer to average house prices adjusted for consumer price inflation) since February 2008.
"We believe that indications emanating from the latest results of the FNB Estate Agent Survey suggest that the residential market still has some way to go before it reaches that 'holy grail' where oversupplies disappear and the market can finally be said to be realistically priced and, yes, in equilibrium."
Absa Home Loans property analyst Jacques du Toit said the average price of a mid-segment house was almost 14 percent lower in November last year than it was in August 2007. "(This) was the result of average nominal house price growth being below the average headline consumer price inflation rate over the past four-anda-half years."
Nominal house price growth, where the effects of inflation are not taken into account, in the middle segment of the SA housing market was 2.2 percent in 2011. This was down from growth of 7.3 percent in 2010.
Auction Alliance CEO Rael Levitt said improvement in house prices remained unlikely. "This (2011) was a tough year for South African real estate and, after three years of trudging through a severe downturn, the year did not present a path to recovery. As buyer-demand cooled, concerns about global sovereign debt heightened and weak prospects for the local economy worried investors.
"From an auction perspective, we saw a distinct cool-off in demand from the third quarter. In an industry well versed in cheery talk about prospects, no one can claim that the property market has endured anything other than a bruising last year. My outlook for 2012 is disquieting. Quite how bad will depend on a myriad global and local issues, but there is no doubt that 2012 will be filled with challenges."
For the next 18 months, he said, improvement in house prices seemed unlikely, given uncertainties over the strength of the economic recovery.
Absa's latest property price indicator showed that the average price of a mid-segment house was almost 14 percent lower in November than it was in August 2007. Du Toit said the price situation was the result of average nominal house-price growth being below the average headline consumer price inflation rate over the past four-anda-half years. "When average annual inflation of 5 percent was factored in, house prices deflated by 2.7 percent in 2011."
Du Toit said unchanged interest rates in 2011, rising inflation, high levels of debt, damaged credit records and tight labour market conditions all played a role.
"House price growth is forecast to remain relatively low this year, while prices are set to decline further in real terms."
Business Report
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