“An estate agent’s creed used to be location! Location! Location! Now it’s price! Price! Price!,” says East London's Jill Fish Properties principal Jill Fish.
According to Fish, who has seen the market shift from a boom which saw demand peak in 2006/07 to the current buyer’s market, location is no longer the only factor that influences the decision to buy.
Fish was reacting to the First National Bank’s (FNB) fourth quarter 2010 Estate Agency Survey which reveals that despite being favoured by low interest rates, residential estate sales are slow.
According to the FNB survey, the estimated average time of properties on the market was a lengthy 15 weeks and 6 days in the fourth quarter.
“The average buyer takes almost a year to shop for their new home, but when he sees it, he takes 20 minutes to make up his mind.
“Sellers need to re-evaluate prices as residential property sales adjust slowly to interest rates cuts,” says Fish.
“Waiting-for-a-sale’ period slightly worse than previous quarter
FNB property strategist John Loos says this quarter’s “waiting-for-a-sale” period was slightly worse than the previous quarter’s 15 weeks and 4 days. This is despite recent interest rate cuts which have seen the prime lending rate tumble from a peak of over 24 percent just before the financial crisis rocked the world in 2008 to the current nine percent.
“On average, the sample of estate agents surveyed in this quarter perceived residential demand to have strengthened very slightly. On a scale of 1 to 10, the agent demand activity rating rose from a previous quarter’s 5,66 to 5,79.
“Seasonal factors are believed to have played a significant role in this, but there also exists the possibility that the interest rate reduction in September had a slight positive impact,” Loos says.
Sectional transfers down six percent, full-title transfers up 11 percent
Fish says sectional transfers were down six percent for the first seven months in 2010 when compared to 2009. However, full title (ordinary free standing type homes) transfers were up 11 percent for 2010.
“However, these statistics were for mainly affordable housing under the R1 million level,” Fish explains.
The high net worth segment’s average time rose slightly from 18,5 weeks in the 3rd quarter to 18,7. The upper income segment rose from 16,1 weeks to 16,4 weeks.
The middle income segment saw a decline from 15,3 weeks to 14 weeks and the affordable segment saw a decline from 16,6 weeks to 14 weeks, FNB says in its Estate Agent Home buying survey by segment.
Rigid affordability assessments that comply with statutory requirements of the National Credit Act (NCA) which became law in July 2007 continue to influence the property market.
Fish says the NCA’s impact has been positive for consumers and softened the blow of the global financial crisis on the South African economy.
“I believe the pain we, as consumers, have gone through will be worth it," says Fish.
By SIYA MITI