Trend spotting - why Property Barometers provide important indicators for sellers and buyers
Category Property Tips
If your property is not selling, it may well be because you are not aware of the latest market indicators.
Property Barometers provide important market information for sellers, buyers and investors. These are produced by the likes of ABSA, FNB and Standard Bank, Ooba, Lightstone (data of all deeds registrations nationally) and various economists and analysts.
They provide guidelines about buyer confidence, stock levels and demand, price growth, how long it takes to sell and the percentage difference between asking and sales prices.
When combining this information, you can usually see whether the market is in equilibrium, meaning that it is well balanced for both sellers and buyers. Or, it could point to a seller's market where stock levels are low, buyer demand is high, and sellers can expect higher prices and faster sales.
Conversely, when the market is overstocked and buyer demand is low, sellers will need to settle for lower prices and sales will take longer. This is the market cycle that we currently find ourselves in.
FNB Property Barometer and House Price Index
Although the bank notes that the national house price growth is up to 3.5% y/y in June, from 3.3% y/y in May, it remains well below the current inflation rate which stands at 4.5% (as at May). House prices are therefore not growing.
At a sub-regional level, FNB notes that the Cape metro is performing well below the above market average with price growth of just 1.2% compared to 3.2% in 2018. Areas such as the Southern Suburbs is experiencing price deflation, recording growth of -2.4% compared to 0.5% in 2018.
The time that it takes to sell a property is now at around 14 weeks and 1 day (or 3 months), better compared to the fourth quarter of 2018, but still weak compared to the average of 12-13 weeks in a healthy market. The average price drop has weakened though to around 9.9%.
ABSA
While still painting a picture of a challenging market, the bank notes that confidence has improved back to the levels of the last quarter of 2018 and higher compared to the second quarter of 2018. Property-buying sentiment is also up.
OOBA
Ooba continues to report a favourable mortgage lending landscape with approval and turnaround rates improving as the banks compete for the limited pool of mortgage loan applications. The average deposit requirement stands at around 13%.
The above reiterates that the market remains challenging for sellers and generally favourable for buyers. The flat price growth and recent 25 basis points' interest rate cut adds to the affordability of property which, in view of the positive mortgage lending factors, should encourage buyers to start taking advantage of the opportunities in the market.
It is important to note though that there are always regional and suburban differences and it is vital to get accurate information about your local market trends from a specialist local area agent.
______
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
