The average time that homes remain on the market before being sold has increased significantly, pointing to a renewed weakness in the housing market in terms of demand relative to supply.
The latest FNB estate agent survey revealed that the average time a home remained on the market before being sold increased to 16 weeks and four days in the second quarter this year from 14 weeks and one day in the previous quarter.
In addition, the percentage of sellers who were required to drop their asking price to make the sale increased to 96 percent in the second quarter from 91 percent in the previous quarter.
FNB said the estimated magnitude in the reduction in asking price also pointed towards a weaker market, with the average drop in asking price increasing to 9.2 percent in the second quarter from 8.2 percent in the first quarter.
John Loos, a household and property sector strategist at FNB, said all three key survey responses related housing market balance or price realism and pointed to a quarterly deterioration in the balance between demand and supply of homes in the second quarter.
Loos said this was reflective of "Ramaphoria" tapering off. He said some of the increase in the average time homes were on the market before being sold was likely to be seasonal because the second quarter was typically a weak one for home buying.
"However, we can't ignore the signs of a quick reversal in national sentiment following the early-2018 excitement, driven by political leadership change in the country late in 2017 and early this year.
"That wave of relative excitement was perhaps always going to be short-lived although we had expected it to continue a little longer. But once the novelty wore off, the reality would remain one of economic weakness and structural impediments to the economy," he said.
FNB reported a slight quarterly increase in the second quarter in the estimated average number of "serious" viewers per show house before sale.
The estimated number of serious viewers per show house increased to 10.42 in the second quarter from 9.47 in the first quarter.
However, Loos stressed that they placed little emphasis on these small quarterly movements because of quarter-to-quarter volatility.
FNB reported that Gauteng appeared to be far closer to market equilibrium than the three major coastal metros combined.
The estimated time Gauteng homes remained on the market before being sold was 14 weeks and one day in the second quarter compared with the aggregated coastal metro estimate of 20 weeks and one day.
Cape Town was the best of the coastal metro regions in averaging 15.86 weeks on the market for the first and second quarters.
By comparison, Greater Joburg averaged 14.29 weeks and Tshwane 11.07 weeks for the same two quarters.
Loos said they subjectively believed the national housing market was in equilibrium in terms of the demand and supply of housing when the average time a house remained on the market before being sold was about 12 weeks or close to three months.
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