Cape Town - South Africa, which is already teetering on the brink of an economic recession, is facing a possible gloomy time ahead.
According to the second quarter 2016 FNB Estate Agent Survey released on Tuesday, a sample of estate agents surveyed point to a further slowing in activity levels in the residential market. This followed a mild improvement in demand in the first quarter.
The second quarter 2016 Residential Activity Indicator declined to 5.77, from the previous quarter’s 6.39.
"The cumulative decline has now become noticeable since the 6.73 high of the 1st quarter of 2015."
FNB noted that changes in activity levels in the housing market are driven by early changes to the economic environment, which drives home buyer confidence levels up or down.
"Being something of a 'leading' indicator of the economy’s direction, this activity rating is possibly pointing to economic growth weakening in the near term," warned the report.
Agent near term expectations of activity levels have, in recent quarters, been moderating.
Agents were asked for their expectations of residential activity levels in the next three months, requesting them to choose between three options, namely that activity will “strengthen”, “weaken”, or “remain the same”.
In the second quarter survey, 13% of agents expected activity to increase in the next three months, while 57% expected it to stay the same and 30% expected a decrease in activity.
"This weak expectation is to be expected when one moves into the slow winter period, seasonality thus playing a major role in dampening expectations. Nevertheless, recent weak readings appear to be more than just about seasonal factors."
There has also been a significant rise in the percentage of survey respondents pointing to “Economic Stress and Pessimism”.
In a follow up question to the agent activity level expectations questions, agents were asked to point out factors that influence their near term expectations of activity in either a positive or negative way.
The most commonly cited factors relate to “Economic Stress/Pessimism”, cited by 41% of respondents, while “Positive Consumer Sentiment” is only cited by 9%.