Residential property sees the lowest activity in 17 years


Respondents surveyed for the latest FNB Estate Agents Survey rated activity in the residential property market during the second quarter of the year at the lowest level since the survey was started 17 years ago.

According to Lightstone Property data, the number of transfers (both bonded and unbonded) recorded at the Deeds Office between April and June amounted to 5 941, which is a 91% decrease from last year and an 88% decrease from the first quarter of 2020.

Furthermore, the FNB survey results indicate the Covid-19 pandemic had not yet led to exceptional discounts in the residential property market. The discount refers to the difference between the final sale price and seller's initial asking price.

The average discount was 12% in the second quarter of 2020, relatively unchanged from 13% in the first quarter. Overall, FNB expects a decline in property prices of around 5% for 2020.

Siphamandla Mkhwanazi, FNB senior economist expects a contraction in prices in the middle to affluent market segments and relative resilience in the affordable market.

The latest survey rates residential property market activity at 3.4 out of ten. This is down from 6.4 in the first quarter of the year and even below the 4.4 recorded in the second quarter of 2008, during the global financial crisis.

The slowdown in residential property activity was experienced across all price segments, although agents in the affordable market (roughly properties priced at less than R750 000) reported relatively better activity.

The time a residential property remains on the market has lengthened to 14 weeks and 1 day, from 13 weeks and 4 days in the first quarter of the year.

Only 44% of the agents surveyed expect activity in the market to improve in the next two to three months and likely mainly in the affordable market segments.

Survey results show "downscaling because of life stage" as still the most prominent reason (23%) for selling a property in SA.

Agents reported an increase in volume of properties believed to be put on the market due to financial pressure and a decline in the volume of sellers who are believed to be looking to upgrade.

The rise in selling due to financial pressure largely came from the low (less than R750 000) to middle (between R750 000 and R1.6 million) priced segments. An estimated 55% of these sellers return to the market and look for a cheaper property, as opposed to renting.

Emigration-related sales remained unchanged at 17% in the second quarter, after having averaged around 18% over the past year. The bulk (70%) of those selling to emigrate are aged between 35 and 44 years old.


The continued rise in home loan applications since lockdown restrictions were eased at the start of June suggests that a modest market recovery is underway, especially at the lower end of the market, according to Carl Coetzee, CEO of BetterBond.

He says the bulk of the home loan applications (78%) in June so far, have been for below R1.5 million, suggesting that much of the market activity is from first-time buyers taking advantage of the favourable lending conditions to gain a foothold in the property market. First-time buyers accounted for 70% of all applications submitted for June to date.

"Notwithstanding the current economic challenges, the banks clearly still have an appetite to lend, as the bond approval rate indicates," says Coetzee.

"The current applications also reflect realistic buyers - their applications for home loans are succeeding in large numbers because the applicants are looking for bond amounts that they can comfortably afford."

Sectional title

According to Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, following the trend from the last quarter, sectional titles properties continue to be worse affected by the lockdown.

The national median price of sectional title properties dropped by 8% to R953 084 from the R1 032 045 reported in the second quarter of 2019 and dropped by 1% since last quarter.

Freehold homes reflected a current national median price of R1 109 852, which is a 3% decrease on the median asking price for the second quarter of 2019. When compared to last quarter, the median asking price decreased by 6%.

Grant Smee, MD of Only Realty, agrees that most of the activity being seen currently  is at the more affordable end of the market - properties below R1.2 million.

In his view, areas such as Port Elizabeth, Nelspruit, the Natal North Coast as well as the north and east of Gauteng are showing good signs of growth and demand in terms of transactions in both home purchases and investment properties.


In the view of Rory O'Hagan, principal of the Hyde Park and Sandton office of Chas Everitt International, its teams in the northern and southern suburbs of Johannesburg, like Hyde Park, Sandton, Randburg and Glenvista have sold more than R500 million worth of property in the past three months. Of these a total of R130 million was from homes sold in the luxury price range of between R5 million and R20 million.

Chas Everitt International group CEO Berry Everitt expects the Johannesburg residential market to continue to benefit in the third quarter from both the partial re-opening of the economy and the fact that many affluent individuals who were planning to emigrate, or to "semigrate" to the Cape, have had to put those plans on hold.

Richard Smith and Jason Shaw, Pam Golding Properties area managers in Johannesburg North, says in Johannesburg, while many established suburbs tick the boxes for buyers in terms of location and price – finding ones that offer community lifestyle living is rare – as properties in these areas are often snapped up upon listing.
Pam Golding Properties has identified six suburbs that offer buyers the trendy lifestyle that is sought after. These include Craighall Park, Norwood and "The Parks" suburbs which include Parktown North, Parkwood, Parkview and Parkhurst.
"Conveniently located close to Johannesburg, Rosebank and Sandton CBDs, these suburbs have a strong sense of community and village-type feel, and offer good value-for-money homes," says Smith.

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