KZN agents’ confidence down

2008-04-24 00:00

Confidence levels among estate agents in KwaZulu-Natal have slumped to new lows amid a residential property market slowdown and local professionals have an even more bearish outlook than their counterparts in other areas of South Africa.

Speaking to The Witness at a briefing in Pietermaritzburg yesterday, FNB national property strategist John Loos said he expects an upswing to occur only toward the final half of 2009.

Furthermore, it appears that year-on-year activity levels in the Pietermaritzburg residential market have plummeted by as much as 33% in some cases.

The latest FNB Property Barometer indicator, a key indicator of both activity levels in the market and sentiment among estate agents, crashed to a low of 4,36 on a scale of one to 10 in respect of activity levels during the first quarter of 2008.

The barometer is a survey of estate agents across the major regions of South Africa.

Although the national figure also sits at a low of 4,86, the KZN barometer remains the lowest of all major regions.

According to the latest "State of the Kingdom" report released by FNB’s Home Loans Division, the KZN barometer is well below its high of about 6,5, recorded at the beginning of last year.

Interestingly, 16% of KZN respondents (estate agents) cited emigration as the reason given by clients for selling. Overall, 12% of all respondents nationally cited emigration as a reason for selling.

Loos said that KZN contains a larger proportion of lower to middle income buyers as compared with other major regions such as Gauteng and the Western Cape.

When one takes into account the impact of rising inflation, this means that a large proportion of potential buyers in KZN have seen their incomes come under pressure.

As a result, KZN’s relatively larger lower to middle income buying market is now less active.

In addition, he believes that KZN is a market that contains a significant number of "holiday buyers".

He argues that this group, which invests in "non-essential" property, is particularly sensitive to interest rate hikes.

The average period that a house remains on the market in KZN increased to 11 weeks during the first quarter of this year and agents believe that 83% of sellers in KZN had to settle for a price below the asking price.

"This more rapid deterioration in KZN’s supply seems evident in the building stats, with 26,9% and 10,3% declines in number of units completed for 2006 and 2007 respectively, whereas Gauteng still had far more respectable [positive] growth rates for the respective years," said Erras Lintvelt, GM of FNB KZN Home Loans Division.

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