Q3 Residential Property Market Update ... window of opportunity for sellers
Category Market Update
Last month we reported that the FNB Property Barometer pointed to the first signs of green shoots on the horizon. The Q3 Residential Property Barometer points to further improvement, but as we know, it is always subject to the broader economic environment.
Nonetheless, we are beginning to see signs of improved market activity to support a cautiously optimistic outlook for the market. We unpack a number of key indicators such as price, time, activity and selling price and how this relates to our micro-market (the areas of Bishopscourt, Claremont Upper, Kenilworth Upper, Kenilworth and Trovato Estate).
Looking firstly at prices. At a national level, prices grew by 3.8% in nominal terms for the third quarter of 2019. Cape Town, it seems has seemingly caught up to the economy with price growth for the first half of the year down to 0.5% in nominal terms. Comparatively, our micro-market average prices grew by 3%, holding up well relative to the national average and outperforming the general Cape market. This is attributable to the area remaining desirable as it is an established area driven largely by proximity to the Cape's best schools.
The next important indicator is the time that it takes from list to sale date. The national average is around 14 weeks and for the Cape Town metro as a whole, it stands at 13.5 weeks. At a micro-market level, our suburbs stand at 15.4 weeks, a notable increase compared to last year's 12.3 weeks and slightly above the national and regional average. This should be viewed as a combination of slower demand, especially in the lead-up to the elections and the pressure on asking prices, especially at the higher price points. Buyers are spoilt for choice with supply exceeding demand and are looking for value in the current market.
While purchasing activity is showing some signs of improvement, property prices remain under pressure. We see that at a macro/national level, the average difference between asking and selling prices (price gap) stands at 9.9% (14% at the higher price bands) and for the Cape Town metro as a whole, it stands at 10.6%. For the micro-market (our suburbs) the price gap has widened to 13% from 11% in 2018, largely as a reflection of the pressure that buyers are putting on asking prices.
The mortgage lending landscape has shown further improvement both in terms of the number of home loans granted and the loan-to-value percentage and together with the lower interest rate provides further support for the improving market.
Ultimately, it is important to "listen" to what the market is telling us. There is a window of opportunity for serious sellers, but you need to mind the gap in terms of setting your asking price at the correct market level. We see that the more accurate the asking price, the smaller the price gap and the faster the sale can be concluded.
Finally, a reminder that a Sole Mandate remains your best bet, especially in a challenging market. It is a contractual obligation on the estate agent/s to focus on the marketing and selling of your property. It has proven time and again to deliver the best results but be sure to work with a credible real estate brand with a proven track record in your area.
______
Make sure to follow us on Facebook, Instagram, Twitter and LinkedIn for the latest tips and trends in the property industry, as well as some of the most relevant news about the area you call home.
Author: Gina Meintjes
