Property picture slightly improved

2009-03-23 00:00

The residential property market does not appear to be out of the woods yet — either in terms of value or volumes — according to a leading property strategist.

This is despite the fact that the first quarter FNB’s Residential Property Barometer (2009) revealed further signs of an improvement in demand activity levels.

FNB property strategist John Loos released the results of the latest property barometer, undertaken in mid-February, yesterday. The barometer is a survey of a sample of estate agents in the major cities of the country regarding their personal experience with market conditions.

The level of demand activity as rated by estate agents on a scale of one to 10 grew to 4,8 in the first quarter of 2009 from 4,6 in the final quarter of 2008.

The barometer’s demand activity index slumped to an all-time low of 4,1 in the third quarter of last year.

Loos said that the improvement in activity is about more than just seasonal factors, as there is a sharp reduction in the year-on-year rate of activity decline, from -21% in the third quarter of 2008 to -3,2% in the first quarter of 2009. However, positive expectations are not yet embedded in the majority of the respondents as only 41% of agents expect further strengthening in demand in the following quarter.

“Interest rates were still the single most important driver of future expectations, with 33% of the respondents positive about interest rate cuts, six percent still ‘wary’ and three percent said rates were still problematically high. However, 31% of respondents said that banks’ lending criteria were still too strict …” Loos said.

Furthermore, 13% of respondents still suggest that sellers’ prices are out of reach for many.

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