High property demand in Mother City – survey

2012-07-16 14:35

Demand for residential property in the City of Cape Town is higher than that of the national average, according to the second quarter FNB Estate Agent survey.

Estate agents surveyed put demand in the city at 6.18 on a scale of one to 10, a second consecutive quarter increase.

This was above the national average rating of 5.87.

“However, the survey may be hinting at ‘seller optimism’, keeping prices unrealistically high,” said Clinton Martle, FNB’s Western Cape property leader sales manager in a statement.

In the survey, estate agents were asked about their perceptions on residential demand, rating it on a scale of one to 10.

When compared to the same quarter last year, demand activity rated 11% higher.

“This is the first time that we’ve seen positive year-on-year growth in the demand rating since the fourth quarter of 2010. This is also the highest demand rating since the first quarter of 2010,” Martle said.

He said there still appeared to be a lack of pricing realism.

Two of the indicators for pricing realism appeared to be moving in contradictory directions.

One of them was the time a property spent on the market before it sold.

“The broad trend in this average has been an upward drift since early 2010, to a second quarter average time of 20 weeks,” he said.

“This would appear strange at a time when agents perceive demand strength to have improved.”

Martle said the trend could be attributed to seller optimism.

This was reflected by a significant decline in the percentage of properties sold below asking price from 100% in the final quarter of 2011 to 80% in the second quarter of 2012.

“The apparent contradiction can perhaps only be explained by increased seller optimism, causing fewer sellers to drop their asking price because they are confident of achieving the price they want, and thereby causing the time on the market to remain long,” Martle said.

Also, the percentage by which sellers had to drop their asking price had not increased, still hovering around 10%.

Martle said there was also improvement in the buy-to-let segment in the Western Cape, from a low of 4% in the third quarter of 2010, to a significant 14% in the second quarter of 2012.

As a result of increased buy-to-let buying, primary residential buying slipped back to 82% of total buying in the second quarter of 2012, down from a peak of 93% in the second quarter of 2010.

The percentage of first-time buyers contributed 21.5% of the total number of buyers for the two quarters, up to and including the second quarter of 2012.

The percentage of buying by couples decreased from a peak of 90% in the second half of 2010, to 75% in the second half of 2012.

In the Cape Metro, the percentage of sellers who sold their houses to upgrade, increased from 11% in the third quarter of 2011 to 19% in the second quarter of 2012.

“However, despite improved confidence in the Western Cape residential market, we must not fool ourselves as to the extent of the financial frailty of many other households that still exists,” said Martle.

He said this was best reflected in the estimated percentage of sellers selling to downscale, due to financial pressure.

This segment stood at a high of 21% in the second quarter.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.